Imagine walking into your local pawnbroker to cash a cheque or exchange currency, only to discover you’re owed money from a previous transaction. Thanks to a recent initiative by the Financial Conduct Authority (FCA), this scenario is becoming a reality for many customers.
The Surplus Dilemma
In the pawnbroking world, when a pawned item sells for more than the loan amount, the extra funds, known as a surplus, are owed to the customer. However, despite existing notification processes which are well established, over £1 million in surpluses remained unclaimed annually, as highlighted in a 2018 FCA review.
Behavioural Insights in Action
To tackle this issue, the FCA collaborated with a pawnbroking firm to implement two behavioural interventions:
- Enhanced Reminder Letters: A redesigned letter sent to customers, which nearly doubled surplus collection rates within 30 days.
- Store-Side ‘Surplus Flag’: A system that alerts staff when a returning customer is owed a surplus. This intervention led to a 44% increase in surplus collections.
These strategies, detailed in the FCA’s recent research note, showcase the power of behavioural design in improving customer outcomes.
Empowering Staff, Benefiting Customers
The ‘surplus flag’ not only aids customers in reclaiming their funds but also empowers frontline staff to provide a better service. By integrating this alert into existing systems, staff can proactively inform customers about owed surpluses, turning routine visits into unexpected windfalls.
A Win-Win Scenario
This initiative exemplifies how thoughtful, low-cost solutions can bridge the gap between businesses and consumers. By focusing on behavioural insights and staff empowerment, the FCA is setting a precedent for other sectors to follow.
For a deeper dive into this research, visit the FCA’s official publication: More than reminders: Empowering pawnbroking staff for better customer outcomes.
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