The FCA’s Consumer understanding: good practice and areas for improvement publication reinforces a key supervisory message under the Consumer Duty: firms are now expected to evidence how consumer understanding is being achieved, monitored and improved over time, not simply describe the steps they have taken to simplify communications.
Consumer understanding is a core Consumer Duty outcome. While the FCA continues to emphasise its outcomes‑based approach, this review makes clear that reliance on proxy indicators, such as no complaints or strong sales performance, is no longer sufficient regulatory assurance.
What are the FCA’s expectations
Across the publication, the FCA highlights good practice where firms treat consumer understanding as an end‑to‑end control, not a one‑off intervention, including:
- using multiple management information (MI) sources, such as call listening, complaints, chat transcripts, drop‑off data and surveys, to identify where customers struggle
- testing communications with real customers before and after change
- designing communications and journeys deliberately, with clear structure and accessibility
- embedding vulnerability and accessibility into testing and governance
- ensuring strong oversight, ownership and documented decision‑making
From a compliance perspective, consumer understanding must now be demonstrable, testable and auditable.
Where firms remain exposed
The FCA’s “areas for improvement” point to three recurring weaknesses:
Weak evidence of effectiveness
Many firms could not show whether changes improved understanding, or why particular design choices were made.
MI without insight
Some firms collected data but could not explain how it informed decision‑making or risk control.
Assumptions about consumer capability
Insufficient testing with consumers who have lower financial capability, accessibility needs or characteristics of vulnerability increases the risk of foreseeable harm.
For firms, these gaps increase regulatory exposure where Consumer Duty compliance is assessed during supervision, skilled person reviews or enforcement investigations.
What firms should focus on now
To strengthen Consumer Duty evidence around consumer understanding, firms should prioritise:
- Defining critical understanding points within customer journeys – where misunderstanding would create harm.
- Triangulating evidence, not relying on a single data source, to assess whether those points are understood.
- Documenting change cycles, linking insight → action → re‑testing in a defensible audit trail.
- Embedding oversight, with clear accountability under SM&CR and regular MI review at senior level.
How Recordsure supports Consumer Duty evidence
Recordsure helps firms move from intention to regulator‑ready evidence by enabling scalable oversight of customer interactions and journeys. Our purpose-built AI technology provides the right tool to examine your client interactions and create irrefutable audit trails and comprehensive MI. Having complete oversight means that you can improve your team’s performance, ensure compliance and deliver better customer outcomes.
Speak to Recordsure about how data‑led oversight can strengthen your Consumer Duty evidence.
Book a demo or get in touch with our team.
