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Consumer Duty: Beat the curse of knowledge

If you're getting to grips with the Consumer Duty, you need to confront a big cognitive bias. Ignore it and nothing is likely to change.

You’ll have heard that, to communicate effectively, you need to ‘put yourself in your customers’ shoes’. Do that, their thinking goes, and you’ll give them the right information, at the right time, for them to make good decisions. It’s advice that the FCA repeats in its new Consumer Duty regulations.

Sounds like a good plan whether you’re contract-based or trust-based, or indeed in any other business. But it’s easier said than done. In fact, anyone hoping to get to grips with Consumer Duty or similar regulations first needs to acknowledge a big cognitive bias that affects every one of us. Ignore it, and nothing about your communications is likely to change for the better.

The curse of knowledge

When you want to understand a new subject, your first instinct is to ask an expert. But experts can be the worst people to explain the subject of their expertise. And when it comes to something really complicated – like pensions or investments – your expert view could lose your audience by the end of the first sentence.

This is because, when you know a subject well, it’s really tough to remember what it’s like to know nothing. No matter how hard you try, you’ll likely find that the words you use and the references you make keep drifting back to what works for you, and not what helps your audience. This is known as the ‘curse of knowledge’, and it hinders everything from teaching to advertising.

At Quietroom, we’ve spent years talking about how to overcome the curse. So if you need to implement the Consumer Duty, we’ve got some ideas to get you started.

1. Imagine you’re speaking to a real person

Don’t think about writing for a huge, anonymous mass of people. Instead, imagine that you’re speaking to one person – a friend or a relative. Consumer Duty says that firms have to take account of what they ‘know, or could reasonably be expected to know’ about the sophistication of their audience. How sophisticated is your friend Angela’s understanding of investment? How much does Granny really know about her pension?

2. Don’t assume knowledge

Consumer Duty sensibly says that jargon should be avoided. The problem is that firms don’t realise how little many people know about their world. You might think that terms like ‘bond’ and ‘equity’ are widely understood. But to many people, they qualify as jargon. So, if you’re writing for a general audience, it’s a good idea to offer short explanations of what might seem like mainstream terminology.

3. Ask the right questions

Consumer Duty means that firms are expected to test their communications for intelligibility. But if you want meaningful results, you need to ask the right questions. ‘How well do you understand this letter’ won’t get you very far – we don’t know what we don’t know. Instead, make your questions action-based. Is this product suitable for you? What would you do after getting this letter? What would happen if you did nothing?

Consumer Duty – and whatever follows it for trusts – might seem like another regulatory hurdle to cross. But embrace it as an opportunity to reset the way your business uses language, and you might be pleasantly surprised at the conversations you end up having.

This article first appeared in Professional Pensions.