FCA says Consumer Duty is improving the design of financial products

The Financial Conduct Authority (FCA) has set out what financial firms can do to improve how products and services can better meet consumers’ needs.

When products are designed with consumers’ needs firmly in mind, they can support good outcomes, helping people make informed choices, get fair value, and receive the support they need over time to navigate their financial lives.

But when product design falls short, it can confuse or mislead, increase complaints and erode trust. And people can end up paying for poor value if products fail to adapt to changes in their circumstances.

The FCA found improvements in how firms design, monitor and distribute products and services under the Consumer Duty, which reduces the risk that people get poor outcomes from buying unsuitable products. In one example, complaints about ATM withdrawals fell by 45% in three months after a firm made app information clearer and improved staff training.

Many firms had also improved product governance, strengthened how they monitor customer outcomes, and taken greater responsibility for how products and services were distributed.

However, the FCA found some firms could improve how they:

• Defined their target markets to make sure products were suitable and worked as intended from the outset
• Identified emerging risks from unsuitable products and services, which lead to poor customer outcomes
• Oversaw third parties that delivered products and services to customers on their behalf.

Charlotte Clark, Director of Cross-cutting policy at the FCA, said “Consumers should be able to trust that the products and services they rely on to navigate their financial lives are designed for their needs, monitored properly, and deliver the outcomes they expect.

“The good practice we’ve found really matters because where products are poorly targeted, or firms lose sight of what’s happening across their distribution chains, consumers can lose out – whether that’s poorly performing products, slow complaint resolution, or paying for services that don’t meet their needs”.

Rebecca Deegan, Director at Fair By Design, said “At Fair By Design, we see the everyday impact when products and services aren’t designed around people’s lives, and how it can contribute to financial exclusion and the poverty premium.

“This report is a welcome and practical contribution to improving consumer outcomes. The examples it highlights, including the use of inclusive design principles, show how firms can move beyond identifying vulnerability to designing, monitoring and adapting services that work better for everyone.”