Regulator wants to know how consumers respond to different types of information
The FCA is running a series of trials to find out how ‘smarter’ disclosures in renewal letters affect customer’s decisions.
The regulator is working with a small number of firms on a series of randomised control trials with modified renewal letters.
The trials are expected to be completed early next year, after which the regulator will publish its findings.
FCA director of policy, risk and research Chris Woolard said: “We want to understand how consumers act in response to different types of information and are using behavioural analysis to help understand how different information in renewal letters can prompt consumers to make more effective choices.
“We hope that this work will give us insight and evidence into what makes for better or more effective disclosure.”
Woolard would not disclose further information because he did not want to “inadvertently prejudice” the results of the live experiments.
His announcement today at the FCA’s general insurance sector conference follows the broker conflicts of interest thematic review, published last week, which concluded that some of the disclosure provided to customers was very generic and unlikely to meet their information needs or enhance their understanding of the services and products provided.
The research also revealed that many SME customers did not appear to fully understand the service that was being provided to them.