The FCA has recently published two key documents as part of their ongoing Consumer Duty reviews. The first is a summary of good practices but also includes some areas for improvement and is intended to act as a kickstart to ensure firms maintain an ongoing focus on Consumer Duty.
The second, FS25/2, highlights what the FCA is planning to do next to improve the regulatory arena for firms to enjoy some increased flexibility in how they deliver good outcomes.
Good Practice and Areas for Improvement
Framing the Conversation: Acknowledging Progress and Highlighting Urgency
The FCA acknowledges the “significant amount of work” undertaken by firms and encourages continued engagement. However, the main focus is the identification of “areas where firms need to go further and faster.” This purposefully creates a sense of urgency and firms should not underestimate the FCA’s commitment to ensuring the Duty’s effective implementation.
The Four Outcomes and Cross-Cutting Themes
The Document focuses on the four Consumer Duty outcomes (Products and Services, Price and Value, Consumer Understanding, and Consumer Support) and cross-cutting themes. Within each outcome, the FCA presents a mini dialogue, highlighting both positive examples (“good practice”) and areas requiring more attention (“areas for improvement”).
- Products and Services: The focus here is on the need for firms to move beyond a tick-box approach to genuinely designing products and services that meet the needs of their target market. The FCA commends firms that have “undertaken robust target market assessments” and “actively monitored product performance.” Equally, it raises concerns about firms with “insufficient evidence of considering vulnerable consumers” and those relying on “generic risk warnings.” The implicit call to action is for firms to deepen their understanding of their target market and embed this understanding throughout the product lifecycle.
- Price and Value: This section focuses on the ongoing debate about fair value. The FCA praises firms that have “developed clear frameworks for assessing value” and “considered a range of factors beyond just cost.” However, it challenges firms that have “not sufficiently evidenced how their pricing delivers fair value” and those with “weaknesses in considering the cumulative impact of charges.” The conversation here demands greater transparency and a more holistic approach to value assessment, moving beyond simplistic cost-benefit analyses.
- Consumer Understanding: This thread centres on the effectiveness of firm communications. The FCA highlights good practice in firms that have “used clear, simple language” and “tested communications with consumers.” The areas for improvement focus on firms that have “provided lengthy and complex documents” and “failed to tailor communications to different consumer needs.” The implicit message is a need for a fundamental shift towards consumer-centric communication, prioritising clarity, and accessibility.
- Consumer Support: The FCA has chosen to focus on the quality of post-sale service, commending firms that have “invested in staff training” and “made it easy for consumers to contact them.” Concerns are raised about firms with “lengthy call waiting times” and “complex complaints processes.” The takeaway here is the regulator calling out the importance of seamless and effective support throughout the consumer journey.
- Cross-Cutting Themes: These themes act as overarching principles that should permeate all aspects of a firm’s operations. The FCA emphasises the importance of “embedding the Duty in culture and governance,” “acting in good faith,” and “proactive monitoring and review.” The areas for improvement highlight firms with “a lack of board engagement” and “insufficient data and MI.” This part of the conversation stresses the need for a fundamental cultural shift within firms, with the Consumer Duty being a core consideration at all levels.
Implicit Expectations and Calls to Action
The FCA uses the publication to convey its expectations and issues implicit calls to action. The repeated emphasis on “evidence,” “robust assessments,” and “clear frameworks” signals that firms need to be able to demonstrate their compliance through tangible documentation and processes. Firms should benchmark themselves against the good and poor practices detailed in this publication.
The language used by the regulator is also telling. Phrases like “should consider,” “need to ensure,” and “must do more” indicate varying degrees of expectation and obligation. While “should consider” suggests a recommendation, “need to ensure” and “must do more” carry a stronger regulatory imperative.
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Source: Article “The FCA Consumer Duty Review” was written by The ZISHI experts, and published in the Advice Matters Magazine | May 2025 |
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