Background
The FCA explains that the Consumer Duty (the Duty) sets a higher standard for retail consumer protection and that, to support firms in meeting the requirements of the Duty, the FCA are continuing to provide firms with examples of good practice and areas for improvement.
The FCA further sets out that the examples in this report are intended to help firms learn from each other and improve compliance with the products and services outcome and are not intended to introduce new regulatory requirements.
Summary
The FCA highlights the following findings, in particular:
- Product and service design, and target market: The FCA explains that firms demonstrated good practice by designing products and services around a detailed understanding of customer needs, often using customer profiles and negative target markets to assess suitability. Many tested target market compatibility through customer journey and vulnerability impact assessments, identifying and mitigating potential harms. Firms also adapted products, services and customer journeys to be more inclusive, including through accessible digital design, clearer communications and tailored support for vulnerable customers. Smaller firms effectively used customer feedback and frontline staff insights. However, some firms need to improve target market granularity, particularly for higher-risk products, and focus not only on identifying vulnerable customers but also on adapting products and services to meet their needs.
- Monitoring and review: The FCA emphasised that firms are increasingly using outcome-focused, customer-centric management information (MI) to monitor whether customers receive good outcomes. Good practice includes combining customer feedback, complaints, root-cause analysis and behavioural data into dashboards that identify emerging risks and trends. Firms monitor indicators such as product usage, cancellations and service outcomes, and use these insights to make targeted improvements. Examples include clearer customer communications, new product features, operational process improvements and enhanced investment options, all of which led to measurable reductions in complaints or improved customer engagement. However, some firms rely too heavily on complaints data and fail to use MI proactively to identify risks. Others make product or service changes without adequately measuring whether those interventions have actually improved customer outcomes.
- Distribution and third parties: The FCA also sets out that firms demonstrated good practice by tailoring distribution strategies to the needs of their target market, particularly for customers in vulnerable circumstances, through accessible channels, fee waivers and alternative ways to access products and services. Many also adapted distribution arrangements to reflect product complexity and reduce the risk of poor outcomes. Effective engagement with distributors, supported by regular management information and feedback, helped firms identify and address issues such as mis-selling and out-of-target-market sales. Firms also took corrective action where distribution issues arose, often using root-cause analysis and ongoing monitoring. Areas for improvement include providing stronger evidence to justify distribution strategies and better measuring whether changes to distribution approaches have successfully improved customer outcomes.