FCA publishes findings of Retail Banking Consumer Duty multi-firm work

The Financial Conduct Authority has published the findings of multi-firm work on how retail banks have implemented the Consumer Duty, covering a desk-based review of 70 product journeys across 47 firms. The work commenced in July 2023 and examined the frameworks firms used, their methodologies, and the results of their gap analyses, according to the Finance & Leasing Association's summary of the findings, published on 14 December 2023¹.

The review covered frameworks and methodologies, results and outputs, target markets, product design, vulnerable customers, consumer understanding and customers in financial difficulty¹. On frameworks, the FCA found that firms with clear expectations or user guides often mapped them directly to sections of the Finalised Guidance, and that firms using a range of data points rather than a single source of insight were better able to consider different types of customers and outcomes in different scenarios¹. On outputs, the FCA said not all firms provided the complete outputs of their analysis, which made it difficult to determine whether firms had fully considered all customer outcomes across a range of scenarios¹.

On target markets, the FCA noted that better frameworks clearly identified who a product was and was not suitable for, including specific customer cohorts¹. On product design, it found evidence of some firms considering qualitative factors such as target market requirements, macroeconomic factors and relationship manager feedback, alongside quantitative factors such as complaint numbers and product revenue¹. On consumer understanding, it found a range of firms adopting a test and learn approach, with better practice involving named responsibility for communications, identification of key prompts used in decision-making, and testing through controlled trials, experiments, surveys, interviews and focus groups¹.

For customers in financial difficulty, the FCA said some firms applied frameworks across their products to review a range of customer journeys, building data to identify trends among customers who could be in early onset of financial difficulty¹. Some firms improved support through financial assistance and support teams and simplified the language used, and some reviewed third party fees and charges including arrears and litigation activity and product charges¹. The FCA reminded firms they must assure themselves they are complying with the Consumer Principle, the cross-cutting rules on acting in good faith, avoiding foreseeable harm and enabling customers to pursue their financial objectives, and the outcomes rules on products and services, price and value, consumer understanding and consumer support¹. It said firms need appropriate management information and must be able to evidence the outcomes customers receive¹.

Why it matters for households

The findings concern how banks and other retail banking firms have embedded the Consumer Duty, which sets the standard of care firms owe to retail customers. The review covered 47 firms and 70 product journeys, so the specific practices described apply to those firms rather than to every provider¹. The FCA's stated concerns are practical ones for customers: whether a firm has identified who a product is and is not suitable for, whether it has tested whether customers understand communications, and whether it has considered the treatment of vulnerable customers in its product reviews¹. The FCA also flagged that incomplete outputs from some firms made it difficult to determine whether all customer outcomes had been considered across scenarios, and reminded firms they must be able to evidence their monitoring and any resulting action on request¹. For customers in financial difficulty, the review records examples of firms reviewing third party fees and charges, including arrears and litigation activity, and simplifying language used in support communications¹. The FCA's expectations restate existing Duty obligations rather than introducing new ones, and the summary does not set out any new rules or deadlines for firms¹.

What happens next

The FCA reminded firms of the need to monitor customer outcomes and to be able to provide evidence of that monitoring and assessment, and of any resulting action, on request¹. It also reminded firms to ensure adequate monitoring is in place when reviewing product design and features or introducing new products¹. No further timetable for this multi-firm work is set out in the summary¹.