Navigating Consumer Duty: The Hidden Cost of Friction

By Shiyu Chen, behavioural scientist and founder at BehaviourAI Lab

Consumer Duty has reshaped the way financial services firms need to think about customer journey. The FCA’s shift from tick-box compliance to outcome-based evidence doesn’t come with sirens or warning, but it does change the ground we’re standing on.

What used to be a design preference is now part of a firm’s regulator responsibility. And this shift invites a different kind of conversation: not about what we’ve declared to customers, but about what they actually encounter.

It’s time to step back, understanding how user journey shapes outcomes, and to diagnose, redesign, and measure those behavioural dynamics through a behavioural science approach.  

Sludge: The Silent Enemy in Consumer Duty

Behavioural scientists often talk about nudges – subtle design choices that help people make better decisions. But there is a darker twin: sludge. Where a nudge supports good outcomes, sludge creates friction that slows, confuses, or traps consumers, often preventing them from acting in their own best interests. Sometimes it’s deliberate. More often, it’s accidental by product of growth driven design.

Under Consumer Duty, however, sludge is no longer a UX flaw. It is a regulatory risk. In other words, user journey is no longer a design preference; it is a regulatory obligation.

From Theory to Practice: Where Sludge Hides

Across the four Consumer Duty outcomes, sludge shows up in predictable and measurable ways. Here are some of the most common patterns observed when conducting behavioural diagnostics:

In Consumer Understanding, sludge emerges when complex layouts bury key risks “below the fold”, leading users to skim past critical information. This becomes visible when users spend only a few seconds on a lengthy Terms and Conditions page before clicking “Accept”.

In Consumer Support, sludge takes the form of exit friction, where cancelling a product requires far more effort than signing up. For example, a two step onboarding journey contrasted with a ten step cancellation process.

In Price & Value, sludge appears through fee shrouding, where total costs are only revealed at the final payment stage, often triggering sharp drop offs when users encounter unexpected charges.

In Products & Services, sludge shows up as dark nudges, such as urgency cues (“Only 2 left!”) that push consumers toward unsuitable choices, reflected in high cooling off cancellations shortly after purchase.

These patterns aren’t simply UX quirks. They are behavioural signals that parts of the journey may be misaligned with Consumer Duty expectations.

Evidence in Practice: Decoding the Metrics

Understanding where harm may emerge in a user journey often begins with simple behavioural signals. Metrics such as reading time vs. scroll depth reveal whether customers meaningfully engage with key information. Similarly, basket abandonment at payment indicates moments where unexpected fees or late‑stage cost disclosures prompt users to drop off.

Other indicators point to friction that distorts decision‑making. The parity ratio can reveal disproportionate effort that may hinder Consumer Support. And the reversal rate often signals that urgency cues or other dark patterns may have pushed users toward unsuitable products.

These metrics don’t provide the full diagnostic picture, but they offer early behavioural clues about where journeys may be creating unintended barriers or risks.

The Behavioural Toolkit: Hook-Fix-Proof

The BehaviourAI Lab offers a structured approach to help financial services firms identify and mitigate sludge before it becomes a regulatory issue. The Hook-Fix-Proof framework integrates behavioural diagnostic, behavioural design, and behavioural validation to improve user journeys.

Hook focuses on identifying the behavioural dynamics that create sludge – the friction points, hidden barriers and decision pathways that shape how users actually behave. This stage surfaces the subtle patterns that traditional UX reviews often miss.

Fix applies choice architecture principles to redesign those pathways, removing unnecessary friction and reducing sludge so that decisions become clearer, smoother, and more aligned with users’ goals. The emphasis is on enabling better choices, not nudging toward predetermined ones.

Proof brings empirical validation, using behavioural measurements to demonstrate whether the redesigned journey truly improves outcomes. This stage provides the outcome based evidence that Consumer Duty now expects – showing measurable behavioural change, not just good intentions.

Is your product journey hiding a Sludge Red Flag?

At BehaviourAI Lab, we help financial services firms diagnose, redesign, and validate their journeys using behavioural science and metrics that evidence Consumer Duty outcomes.

Don’t wait for the regulator to spot the friction. Book a Sludge Diagnostic and get ahead of the risk.