Consumer focused crisis communications: from good practice to regulated practice?

Many communications professionals will have missed the July 2018 Bank of England (BoE) and Financial Conduct Authority (FCA) Discussion Paper on how the financial services sector can improve operational resilience to severe but plausible events. However, the topics it explores are likely to have significant implications for communications and corporate affairs teams.

Here are three key things for communications professionals to be aware of:

1.   Communications plans need to be developed assuming disruptions will happen and they could be severe

In response to recent market shocks such as the global financial crisis, geopolitical events, technology failures and a hostile cyber environment, the BoE and FCA are calling for a step change in how financial services firms and financial market infrastructures consider operational resilience. They are calling for a significant shift in mind-set; telling firms to assume disruptions will happen and that they could be severe.

By stressing the inevitability of such events, the Discussion Paper emphasises that preparing for an operational disruption is as important as attempting to prevent one. The BoE and FCA recommend firms undertake planning activities to prepare for severe but plausible events, and this includes developing and testing detailed communications plans for such events.

2.   Communication plays an important role in mitigating consumer harm

The supervisory authorities are stressing the importance of communications in mitigating consumer harm. Except where wider financial stability might be at risk, firms are being encouraged to think, first and foremost, about the impact of any disruption on the end user or consumer. This means they should have plans enabling prompt and meaningful communication to internal and external parties (including supervisory authorities, consumers, other clients and the press).

In emphasising the impact on the consumer, firms are being told: ‘it’s about them, not you’. Communications plans for different types of disruption need to be designed with those impacted in mind. In developing such plans, firms will need to understand and anticipate likely consumer behaviour. Understanding how consumers will act in reality is vital in communicating effectively with them and mitigating the potential impacts of a disruptive event. Failure to do so may mean the harm done is significantly increased.

This will be particularly important for vulnerable consumers who, due to their personal circumstances, may be especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care. This group is a particular focus for regulators (see, for example, the FCA’s July 2019 Consultation Paper on Fair treatment of vulnerable consumers) and communications planning will need to be exceptionally attuned to their needs.  

3.   Corporate affairs teams need to be fully integrated into operational resilience activity

This new, more rigorous approach to crisis communications planning will also require communications teams to be far more integrated into operational resilience activity than is currently the case in many organisations.

This includes ensuring that communications planning is subject to the same governance and assurance processes as overall operational resilience capabilities. It will also require specific training of communications teams and operational functions, including ensuring they are involved in all strategic and operational crisis management activities.

What is next?

The supervisory authorities are considering whether there should be specific rules or further guidance on the content of communications planning activity. As such, the latest Discussion Paper may be an early warning of future regulatory requirements. Firms should seek to get ahead of this eventuality by immediately starting to integrate consumer focused communications planning into their wider operational resilience activity.

Although this will primarily concern those in the financial services sector, communicators in other industries should also consider whether there are any lessons that they can learn from this. In particular, they should consider whether adopting a consumer focused perspective could be a beneficial new way to frame their approach to crisis communications planning.

Contact John Williams to discuss the issues raised in this blog post or chat more generally about crisis communication and reputation management.