The digitalisation of financial services is changing how consumers make decisions and markets operate. To be an effective regulator, we must respond both to today’s challenges and prepare for tomorrow’s.
We need to better understand emerging risks and opportunities so the huge benefits from greater competition and innovation are realised and the harms to consumers reduced.
Fair value
Outcome 1: The development of digital markets and the use of new technologies in financial products and services leads to fair value for consumers
| Metric code | Metric description | Source | Baseline Value | Year 1 values | Year 2 values |
Latest status (year 2 value compared to baseline) |
|---|---|---|---|---|---|---|
| SDM1-M01 | The level of consumer satisfaction from using digital financial services and products. | FCA Financial Lives survey (FLS) | We have added a question to the Financial Lives survey capturing how satisfied people were with their most recent experience using a digital or online service from their, financial services provider. The FLS results will be available by the end of 2024. The results will provide a baseline value. | N/A | N/A | Not Assessed |
| SDM3-M01 | Increase in our perceived effectiveness in supporting the development of digital markets and new technologies in financial services | FCA and Practitioner Panel survey |
(2022/23) |
N/A |
(2023/24)
Difference between year 2 and baseline value is statistically significant. |
Improved |
Suitability and treatment
Outcome 2: The consumer journey for digital financial products and services enables consumers to take decisions in their best interest
| Metric code | Metric description | Source | Baseline Value | Year 1 values | Year 2 values |
Latest status (year 2 value compared to baseline) |
|---|---|---|---|---|---|---|
| SDM2-M01 |
Reduction in sludge and other harmful digital design features in areas where we have taken action In areas where we have taken action, we will review the extent of sludge and other harmful design features at an appropriate point in the future, once our actions have had time to take effect
|
FCA data | N/A | Our investigation into harmful digital consumer journeys led to supervisory action against several firms. We highlighted the importance of making sure sludge practices are identified and remedied in the portfolio letter we sent to c700 firms providing high-cost lending products. | Firms are reviewing customer journeys and product design as part of Consumer Duty implementation. We have seen some firms removing negative obstacles and “sludge” practices that make it more difficult for customers to act in their own interests | Not assessed |
What the latest metric values tell us
For metric SDM3-M01 our FCA and Practitioner Panel survey 2023/24 shows that there has been an increase in the percentage of firms that agree or strongly agree in our effectiveness at supporting the development of digital markets and new technologies in financial services.
We expect our work:
- to lead regulatory thinking on the use of Artificial Intelligence (AI) in UK financial services
- to establish the next phase of open banking through the Joint Regulatory Oversight Committee
- work with regulatory partners through the DRCF
- to tailor regulatory support on existing innovation services that help businesses bring new products and services to market, including launching a DRCF AI & Digital Hub
should continue to positively influence this metric.
But we know our actions may take time to be reflected in this measure, and firm and consumers’ perceptions may also be influenced by the pace of technological change, adoption and what is happening in other markets.
For metric SDM2-M01, our previous investigation into harmful digital consumer journeys led to our action against several firms. Firms are reviewing customer journeys and product design as part of Consumer Duty implementation. We have seen some firms removing negative obstacles and “sludge” practices that make it more difficult for customers to act in their own interests. We are/have also undertaken research into the gamification of trading suggesting some potential risks in the product design, which we will/have publish to guide firms as they conduct reviews for the Consumer Duty.