By requiring firms to test and simplify their communications so consumers are able to understand them – and to measure the outcomes consumers achieve, this has placed a spotlight on how intelligible financial communications of all types are. For far too long, making sure the information was complete has been prioritised over whether it was able to be read and understood.
In many cases it simply hasn’t.
Even when consumers try to engage with long, dense and technically complex communications, too often they can’t understand or apply the information.
Amplified Global is trying to help firms to make the changes the FCA is aiming to achieve. And by doing that, keep consumers better engaged, and informed.
We have developed technology that is able to accurately predict how intelligible written information is. AI and machine learning have unlocked new approaches to assess and improve communications.
We’re quite a young startup, but we’ve had a lot of support. Initially through the FCA’s Innovation pathway, and testing in their regulatory sandbox. Then through the LawTech UK Sandbox and our work with the Solicitor’s Regulation Authority. It’s help us keep abreast of changes to regulation, but also allowed us to push the science behind consumer comprehension. We can do much more now to assess true intelligibility, accurately and at scale. It’s a step up from what we’ve had previously. And it feels like it's come at the right time.
Firstly, our knowledge of what impacts on intelligibility and comprehension for the reader has expanded. Going beyond ‘readability’, to be able to measure and improve true ‘intelligibility’ reflects the underlying law and regulation – i.e. that the right information is presented, that it can be understood, and that the information can be used to inform the consumer’s decision or action.
To do this, you need to test how conceptually difficult to understand written information is, as well as how readable it is. The readability aspects such as grammar, sentence length, word length and so on are part of what creates intelligibility. But you also must be able to assess conceptual difficulty. You need to measure and avoid ambiguity - after all many words can mean different things in different contexts. In the words of the Consumer Rights Act, to write “in plain and intelligible language”.
Being able to test this reduces risk for the firm, and improves understanding outcomes for their customers.
During our time in the FCA Sandbox, we simplified and tested a few regulated communications, which included Pre-Contract Information, and Default Notices. We did this with the help and support of Nottingham University’s Professor Richard Hyde, the Gillmore Centre for Financial Technology, and a not-for-profit lender, Fair For You.
Both documents are prescribed in terms of their content, the language used, and their format. We simplified these - firstly, to the extent they could be under current rules. And then in a non-compliant way, which use the same information, but presented it outside of the prescribed format and language.
We found that the simplified versions both created better understanding. We tested this not only through recall tasks, but also through scenarios and asking the reader to apply the information. And the testing we had done with the technology was a good predictor of understanding, although since then we’ve done a lot more refinement and testing.
Understanding is of course critical. But the information we receive, particularly from big companies and those involving issues such as credit and debt, can have other impacts. And for those in arrears, receiving debt notices can be very difficult.
A perhaps more unexpected results of our tests was that, as well as improving understanding, we also improved the emotional response from readers. They experienced less anxiety and were more likely to take action, such as calling their lender, after reading the simplified notice. They also perceived the communication to be more helpful, and felt more confident that there was help available to them.
Simplification helps comprehension, but also how the communications are received and perceived by the reader. This could be a game changer for debt support and for encouraging indebted consumers to seek the help available to them.
However, the current regulations and the high levels of prescription can get in the way, and prevents firms from simplifying information.
The FCA has signposted future changes to the Handbook to give more latitude to firms in how they choose to communicate. Combined with a big focus on monitoring outcomes and testing the effect communications have, this could be a rare opportunity to change how we communicate for the better.