In response to one of the Parliamentary Commission on Banking Standards’ (PCBS) recommendations (‘Banks need to demonstrate that they are fulfilling a duty of care to their customers, embedded in their approach to designing products, providing understandable information to consumers and dealing with complaints’) the FCA previously commissioned a survey of 17 retail banks and building societies to review how they assess whether their customers understand the products they had bought. Building on the survey results the FCA subsequently conducted a thematic review involving 18 retail banks and building societies.
The FCA has now published Thematic Review 17/1:Customers understanding: Retail banks and building societies (TR17/1). In TR17/1 the FCA reports on its thematic review, sharing examples of how its sample banks and building societies have responded to the PCBS’ recommendation. By sharing these examples the FCA hopes to help other firms in developing their approaches in this area.
In its thematic review the FCA found that:
- firms are increasingly alert to the importance of assessing customer understanding and are developing practices to enhance this;
- some firms have made good progress in developing practices to help ensure their customers has a reasonable opportunity to understand the products they have bought;
- a few firms continue to confuse customer understanding with customer satisfaction;
- the most developed systems and practices for checking customer understanding are undertaken post-sale, for example, through customer contact exercises; and
- practices appeared least developed in the area of online sales, but a number of firms were taking steps to develop this area further.
View FCA thematic review report on customers’ understanding of products bought, 17 July 2017