Evidence type: Insight i
Qualitative research is more exploratory, and uses a range of methods like interviews, focus groups and observation to gain a deeper understanding about specific issues - such as people’s experiences, behaviours and attitudes.
Quantitative research uses statistical or numerical analysis of survey data to answer questions about how much, how many, how often or to what extent particular characteristics are seen in a population. It is often used to look at changes over time and can identify relationships between characteristics like people’s attitudes and behaviours.
One of the Financial Conduct Authority’s (FCA) central regulatory objectives is to improve how markets operate. Mortgages have come under increasing scrutiny for the ‘loyalty penalty’, where suppliers charge existing customers higher prices than new customers, based on the expectation that they are unlikely to switch to get a better deal. A previous study, the FCA’s Mortgage Market Study, found that, in terms of switching, the mortgage market works well for the majority of homeowners, but the FCA estimates that around 800,000 consumers (around 10% of mortgage holders) do not switch when they would financially benefit from doing so. This study was undertaken to look at the profile of non-switchers, to better understand the barriers to switching and to explore interventions that could encourage switching behaviour.
The study comprised the following:
Because behavioural research has shown that humans can be poor at rationalising their decisions, particularly in relation to financial services, the research included two techniques which aimed to go beyond reported attitudes or behaviour to understand latent attitudes and observable behaviour. These techniques were a Key Drivers Analysis (KDA) used in the survey stage, and a Decision Making Exercise used in both the interviews and surveys.The research was commissioned by the FCA and conducted by Savanta ComRes, an independent research consultancy.
The findings are in three key areas:
The authors also note that any intervention would have to balance non-switchers’ preference for a reduction in cognitive load and addressing their concerns about the switching process, and that as many non-switchers are already aware that they can benefit financially from switching, other perceived barriers will need to be addressed.