Firms improve product design for consumers, FCA finds
The Financial Conduct Authority reviewed how firms design and monitor products under the Consumer Duty. It found encouraging progress in some areas, but significant inconsistencies remain across the sector.
Product design under Consumer Duty
The Financial Conduct Authority (FCA) reviewed how firms are designing, monitoring, and distributing products and services under the Consumer Duty.
The review focused on getting product design right from the outset, keeping products under continuous review, and taking responsibility for outcomes where products are sold by third parties.
Overall, the FCA found encouraging signs of progress, with many firms strengthening their product governance and monitoring consumer outcomes more effectively.
Examples of positive impact include a firm providing mini fridges for customers to store medication, a banking firm cutting ATM withdrawal complaints by 45% through app improvements, and another firm reducing financial abuse risk with a special debit card for caregivers.
These changes help ensure products meet consumer needs and allow firms to address problems earlier.
Gaps in monitoring and oversight
Despite encouraging progress, the FCA identified significant inconsistencies in firms' approaches.
Some still rely on broad or generic target markets, hindering suitability assessments and problem identification.
In monitoring, many firms collect data, but not all effectively use it to identify emerging risks or improve products.
Weaker examples showed firms struggling to escalate insights or challenge them through governance.
Gaps also remain in distribution oversight, with some firms having limited visibility over third-party sales.
This increases the risk of poor outcomes going unnoticed, particularly for vulnerable consumers, when product design falls short and firms fail to adapt to changing circumstances.
A necessary, but incomplete, shift
The FCA's review confirms the Consumer Duty is driving positive change, yet its impact remains inconsistent.
While some firms genuinely embed consumer needs, others still treat it as a compliance exercise, leaving gaps in protection.
This uneven application means the Duty's full potential to prevent harm, especially for vulnerable consumers, is far from realized.