Consumer Duty: Latest Update
On 24th September, the FCA updated its Consumer Duty focus areas publication. The update does not introduce new rules or change the underlying requirements of the Consumer Duty, but it does provide more detail on the areas where the FCA is planning to shift its focus over the foreseeable.
The good news is that we don’t need to prepare for another regulatory change, but we do need to be asking whether existing Consumer Duty arrangements would withstand scrutiny in these focus areas.
Consumer Credit: can customers really understand promotional offers?
The FCA is very concerned about consumer understanding in the credit card market, including whether customers can understand the terms and conditions of products and have sufficient clear information to make effective decisions, particularly when they’re looking at promotional offers.
For firms involved in credit promotions, this raises a practical question: is the information technically correct, or does it actually enable customers to understand what they are agreeing to?
Firms could consider testing promotional communications from the customer’s perspective.
For example:
Would a customer understand when a promotional rate ends?
Are the consequences of not clearing a balance sufficiently clear?
Are important terms prominent rather than technically disclosed, but easy to overlook?
Does the customer journey support an informed decision at the point it matters?
The FCA has previously emphasised that consumer understanding is about helping customers make effective, timely and properly informed decisions, with information presented in a way they can understand.
Insurance: consumer understanding remains under scrutiny
Insurance firms should also expect continued attention on consumer understanding, including the FCA’s work following the Which? Super-complaint concerning home and travel insurance.
This is particularly relevant across the customer journey rather than simply at the point of sale. Firms should consider whether customers receive information they can understand when obtaining a quote, purchasing or renewing a policy, and making a claim.
Firms should ask the question: “Could our customers understand what the policy does, and does not, cover at the point they need that information?”
This moves the focus beyond checking whether the required information has been provided and towards whether communications are producing the intended customer outcome.
Premium finance: fair value could lead to supervisory action
The FCA has also confirmed it will continue monitoring prices in the premium finance market. Where firms are not providing a fair deal, the FCA says it will act. This may include challenging individual firms and, in the most significant cases, enforcement action.
This is an important reminder that a fair value assessment should not simply be an annual exercise producing a report. Where monitoring identifies poor value, firms need to demonstrate what they have done about it.
For firms using or providing premium finance, this means being able to evidence:
How the price paid relates to the benefits provided
How different customer groups are affected
What MI is being used to identify potential poor outcomes
What action has been taken where concerns have been identified.
Model portfolios: findings expected in 2027
The FCA is examining how model portfolio services (MPS) firms are implementing the Consumer Duty, with findings expected in Q1 2027. For firms operating in this area, now is the time to review whether Consumer Duty governance is genuinely embedded within model portfolio arrangements, particularly around product governance, fair value, consumer understanding and outcomes monitoring.
Across all sectors: outcomes, friction and closed products
The FCA’s broader areas of interest shouldn’t be ignored. They continue to examine customer-journey friction, outcomes monitoring and closed products and services. The FCA has also stressed that firms should expect a general focus on their implementation and embedding of the Consumer Duty as part of supervisory engagement.
This is significant because the Consumer Duty is outcomes-based. The FCA’s own guidance emphasises that firms should assess, test, understand and evidence the outcomes their customers are receiving on an ongoing basis. Firms could have policies, procedures, MI and governance arrangements in place and still face questions if the evidence does not demonstrate good outcomes in practice.
What should firms do now?
The update provides a useful prompt for us all to revisit Consumer Duty monitoring plans. Practical actions could include:
Map monitoring activity against the FCA’s focus areas: Identify which areas are relevant to your business and whether they are adequately covered by existing monitoring, MI and governance.
Test promotional communications: For credit firms, assess whether customers genuinely understand promotional offers rather than simply confirming that prescribed information has been included.
Review insurance communications across the customer journey: Consider quotation, purchase, renewal and claims, particularly where misunderstanding could result in foreseeable harm.
Make fair value assessments actionable: Where monitoring identifies poor value or potential harm, ensure the issue is recorded, its root cause is considered and the action taken is documented.
Look beyond the existence of controls: Ask whether the firm’s evidence demonstrates good customer outcomes in practice. The FCA’s recent publications continue to emphasise examples of good and poor practice to help firms assess the effectiveness of their own approaches.
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