Consumer understanding is one of the four outcomes under the Consumer Duty.
The FCA wants firms to help customers make effective, timely and properly informed decisions, and present information that is fair, clear, and not misleading. Customers should have the information they need, at the right time, and presented in a way they can understand. This is key to firms creating an environment in which customers can pursue their financial objectives.
The FCA has published a report, “Consumer Understanding: Good practice and areas for improvement”. This is based on the results of a survey of 38 firms across financial services, combined with supervisory findings, firm data, behavioural research, wider insights and extensive engagement with industry bodies, charities and consumer groups to build a comprehensive picture of current practice.
The guidance is split across five areas:
Management information (MI) and testing.
Innovation and communication design.
Vulnerability and accessibility.
Financial promotions.
Governance and oversight.
Key findings summary:
Using insight to identify where consumers struggle: Good practice involves firms analysing insights from multiple sources including call listening, complaints, chat transcripts, website analytics, drop-off data (customers who start but do not complete a specific process) and surveys. They review this evidence regularly and prioritise meaningful improvements rather than simply making cosmetic changes.
Testing communications with real customers: Good practice involves testing both before and after changes. Firms use proportionate tools such as surveys, comprehension checks, A/B testing (before and after) and feedback from frontline interactions. They verify whether changes improve customer understanding and adapt based on the results.
Communicating clearly, simply and accessibly: An effective approach includes plain language, clear structure, visual hierarchy and layered content. Firms place essential information upfront, highlight risks and exclusions early, and support those who need alternative or accessible formats.
Designing journeys and tools that support understanding: Well-designed customer journeys incorporate calculators, videos, walkthroughs and summaries. These tools are tested to make sure they genuinely help customers and refined based on user evidence.
Supporting customers with characteristics of vulnerability: An effective approach is to identify needs early, adapt communications accordingly and embed vulnerability considerations into governance, training and testing. This includes testing with vulnerable cohorts and ensuring accessibility throughout journeys.
Clear, fair and balanced financial promotions: A good approach aligned with the Consumer Duty makes sure promotional content is balanced, accessible and easy to understand. Firms give risks equal prominence to benefits, avoid jargon and test that key messages — including eligibility criteria and limitations — are properly understood.
Governance and oversight: Good practice includes clear ownership of the consumer understanding outcome. Firms maintain defined governance, review management information (MI) regularly, track actions, and make sure decisions lead to improvements. Oversight is embedded into everyday business processes.
ITC is working through this report to see if there are ways in which we can enhance further the consumer understanding outcome for customers across the network, on top of our existing processes including training, customer communication and documentation, the APEX platform, review of financial promotions, oversight, etc. We look forward to working with you on this so that customers continue to receive good outcomes.