& Conduct Risk
How Customer Insight can
help YOU manage
Conduct Risk, not the FCA
Why should you listen?
❖ Created and lead customer insight teams for all the major
insurance brands, products & channels used by Lloyds
Banking Group over 13 years
❖ Added over £11m incremental profit to bottom line annually
❖ Pioneered LBG work with FCA on Behavioural Economics
testing insurance communications
❖ Developed capability into a team of 44 & mentored next
generation of leaders
Paul now leads Laughlin Consultancy, a specialist business:
“Helping businesses make money from customer insight”
Laughlin Consultancy helps companies maximise sustainable
value from their customer insight, for example by growing their
bottom line, improving customer retention and demonstrating
to their regulator that they treat customers fairly.
How FCA is using Spotlight
‘Proofs of Concept’ initiatives
Customer Contact Centre
Profiling FCA consumers to build a more effective picture of the
types of ‘customer’ the FCA has, and customer management
Taking firm customer lists; profiling the customers; examining
potential for risk and mis-match with marketing intentions
Consumer Credit – Consumer journey
Using segmentation model to explore differences in use of credit
and personal risk, to inform emerging organisation strategy
PRR Insight Papers and Reports
Using the segmentation model to identify the consumer segments
most likely to be affected by a particular emerging risk
Victims of Financial Crime
Profiling victims to segments; interviewing a sample from key
segments to build an understanding of how they got caught, and
use the insight to help inform enforcement and communications
Policy, Risk &
Why is this relevant to you?
Even when you treat them as individuals & target them
accurately, your customers could be vulnerable to making
poor decisions due to these biases.
Do your customers…
1. …find your propositions complex & boring?
2. …need to make decisions based on assessing risk or uncertainty?
3. …need to make trade-offs between the present and the future?
4. …find these decisions emotional or fearful?
5. …lack opportunities to learn by making these decisions?
Mental Accounting & Narrow Framing
The behaviour whereby people treat money or assets differently
according to the purpose assigned to them.
Considering decisions in isolation not overall impact.
Spotting the ‘Dark Side’
FCA clearly signalled BE will form a key part of its policy,
enforcement & supervision toolkit.
FCA have stated they will use these as early warnings:
• Rip-offs: Uncompetitively high margins
• Suckers: Concentrated profits in small customer group
• Bargains: Innovative propositions that appear very cheap
• Traps: Contract features that often target BE biases
• Regret: Reported or potential regret
• Folly: Choices out of line with common sense
• Confusion: Observed or likely confusion
How diverse they can be & how to
respond to the FCA’s challenge
1. Cross functional teams review data,
research and analysis to answer a set of
core questions about their target
customer and “map the evidence”
2. Those “Evidence Maps”
are reviewed to identify key
3. Structured questioning
techniques are used to dig
deeper to develop insights
A “Customer Insight” is:
A non-obvious understanding
about your customers, which if
acted upon, has the potential
to change their behaviour for
4. Insights are prioritised &
converged with opportunity
areas. to generate ideas
Insight Generation Workshops
Model for designing BE tests
Bias 3? Bias 2?
Biases at work &
Review BE biases
that could explain