A good practice review into Consumer Duty by the Financial Conduct Authority (FCA) has found 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 to navigate their financial lives.
When product design falls short, it can confuse or mislead, increase complaints and erode trust, leaving people out of pocket or paying for poor value if products fail to adapt to changes in their circumstances.
The latest review from the financial services regulator found many firms had improved product governance, strengthened how they monitor customer outcomes, and took greater responsibility for how products and services were distributed.
Identifying areas for improvement, the FCA stressed the importance of clearly defining target markets to ensure products are suitable and work as intended from the outset, as unsuitable products and services lead to poor customer outcomes. A greater focus on oversight of third party affiliates and resellers with structured engagement was also identified as an example of best practice.
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 is director at Fair By Design, which works with the government and other organisations to ensure essential services don’t cost more for those on low incomes, known as the poverty premium.
She 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.”
Introduced in 2023, Consumer Duty sets higher standards of consumer protection in financial services, requiring providers to identify requirements and deliver products that fulfil these requirements rather than pushing unwanted and needed products, and supporting those products with fair pricing and accessible customer service.
