The FCA recently outlined their findings in their recent Regulatory Reports for retail customers. The report highlighted both examples of good practice and areas for improvement. Thistle Initiatives Consultant, Sophia Ioannou, goes through the report and highlights the findings and what firms should be doing.
The FCA has published its findings on how firms deliver good outcomes for retail customers under the Consumer Duty. The findings highlight examples of good practice and areas where firms require improvement. The findings are relevant to all regulated firms that provide products or services to retail customers, in particular, firms that design, manufacture, distribute or support products and services. The findings cover the following areas:
1. Management Information and Testing
The following areas of good practice were observed:
- The use of a range of data sources, such as call monitoring, complaints, chat transcripts, website analytics and surveys, allows firms to identify where customers may find communications unclear.
- Testing customer communications before and after launch, including documenting changes, reasons for changes, impacts, and ensuring a clear connection between insight and action. Outcomes-focused testing helps firms develop meaningful metrics, identify effective approaches for different groups and detect problems early.
- Testing digital tools to ensure they improved customer understanding, adjusting and retesting to confirm improvements were effective.
Areas for improvement include:
- Insufficient or poorly documented testing, which is not sufficiently tailored to different customer groups.
- While some firms collected management information (MI), they were not able to clearly show how this determined their assessment of consumer understanding or influenced decisions. Reliance on sales performance or no complaints does not demonstrate customer understanding.
- Documentation of changes lacked clarity, and they were not reassessed to confirm whether they achieved the intended effect.
2. Innovation and Communications Design
The following areas of good practice were observed:
- Carefully structured communications using simple language, presented in a way that is easily accessible for different needs.
- Using prompts and interactive features to support customer understanding.
Areas for improvement include:
- Superficial design changes that do not improve the clarity of information provided, and a lack of testing of new designs provided to customers.
- A lack of tailoring communications to different customer needs, including vulnerable clients.
- Extensive documents with poor guidance require customers to find information with limited support.
3. Vulnerability and Accessibility
The following areas of good practice were observed:
- Considering customer capability by communicating in a way which is clear and simple.
- Ensuring customers receive timely information and support to make informed decisions.
- Recording customers’ accessibility requirements and communication preferences.
- Frequently testing communications with customers, including those who may be vulnerable, and monitoring outcomes for such customers.
Areas for improvement include:
- Responding to issues as they arise rather than being proactive, showing a lack of consideration of how vulnerability translates into practical actions or measurable results
- Governance or control framework considerations are not considered as part of ad-hoc improvements made.
- Tools of testing have been introduced, but they have not demonstrated outcomes for vulnerable customers.
3. Financial Promotions
The following areas of good practice were observed:
- Clear and accessible information which is easy to understand, is consistent across formats and avoids jargon.
- Using insights from customer feedback to ensure risks, limits and eligibility are clear.
- Clearly documented approvals, with financial promotions tested before distribution and good record keeping of governance decisions.
Areas for improvement include:
- Focusing on benefits while downplaying limits or risks results in confusion for customers.
- Reliance on compliance reviews or sales data, with a lack of consumer testing to assess customer understanding.
- Insufficient outcome monitoring, with limited monitoring of customer understanding.
- Use of language which is unclear, unbalanced and inaccessible.
4. Governance and Oversight
The following areas of good practice were observed:
- Responsibility for consumer understanding is assigned to a member of staff with sufficient seniority, ensuring MI guides decisions, communications are clear and consistent record keeping of decisions.
- Effective governance structures ensuring input is provided by relevant teams and a committee/working group to discuss and monitor the Consumer Duty.
- Integrating customer understanding into daily operations, training staff, reviewing interactions, retesting communications and enabling prompt escalation of unclear messaging.
Areas for improvement include:
- Lack of clarity on who is accountable for decisions or for ensuring customers understand communications.
- Limited monitoring or testing results are shown for different customer types.
- Monitoring insights are not consistently fed back into governance or used to improve communications, meaning lessons learned are not often acted upon.
- Lack of MI to indicate risks and inform decision-making.
What Does This Mean for Firms?
Firms should review these findings against the current approach adopted, ensuring good practice examples are referenced and areas for improvement are considered to ensure they meet their obligations under the Consumer Duty.
Meet the Expert
Sophia Ioannou, Consultant 
Sophia recently joined Thistle as a Consultant in the Investment Wholesale team. She holds a Bachelor of Science in Psychology from the University of Nottingham and brings a strong foundation in investment compliance. Before joining Thistle, she worked at a hedge fund where she supported regulatory development projects and contributed to policy reviews, giving her practical insight into how firms adapt to emerging requirements. She has also completed the CISI Introduction to Securities and Investment and Global Financial Compliance modules, which further strengthened her technical knowledge.