What three years of Consumer Duty tells us: common themes from FCA multi-firm reviews

Across consumer finance sectors, the FCA found that many fair value assessments relied on narrative statements or firms' own costs as justification for pricing, without evidencing that the total price was reasonable relative to the benefits customers could actually expect to receive.  Assessments were often incomplete, based on outdated information, or scattered across multiple documents without being brought together into a coherent picture.  The FCA expects a clear, evidenced relationship between what customers pay and the benefits they receive, supported by quantitative analysis and actual customer data, not assumptions.

The FCA's review of unit-linked non-workplace pensions and savings found that around half of policies sampled were in legacy or closed products, and customers in those products were more likely to receive poorer value than those in newer ones, often because of complex, multi-layered historic charges, older administration systems and limited data quality.  Data and system limitations do not remove the obligation to assess and evidence fair value: the FCA has confirmed it will take supervisory or regulatory action where progress is inadequate or evidence is weak.  Firms holding closed or legacy books, including those acquired through portfolio transfers, must assess and remediate poor value proactively rather than waiting to be challenged.

In the consumer finance fair value review, many firms treated their entire target market as a single group, making it impossible to identify whether particular cohorts, such as customers on different pricing bands, legacy customers or those with characteristics of vulnerability, were quietly paying more or receiving less.  The FCA found that some firms identified customers with vulnerability characteristics but did not then compare their outcomes with other groups or examine the cumulative impact of fees on them.  Good practice involves segmenting by factors such as credit risk, product usage, distribution channel and vulnerability driver, and assessing fair value across the resulting cohorts.

In the payments firms review, the FCA found that some firms identified very few, or in some cases no, customers in vulnerable circumstances, despite having customer bases where characteristics of vulnerability would reasonably be expected.  A number of firms relied heavily on staff judgement with limited supporting processes and could not evidence consistently how vulnerability information was recorded and passed through the customer journey.  Firms need to embed identification actively in online and automated channels, use data signals and call monitoring to flag potential vulnerability, and be able to demonstrate that their policies are actually working in practice.

The FCA's dedicated outcomes monitoring review found that firms often described monitoring at a high level but did not have a clear structure for identifying poor outcomes or understanding why they occurred.  Many firms set specific thresholds for metrics such as complaints or file review pass rates but could not explain why those thresholds indicated good or poor outcomes and used operational activity metrics as a proxy for customer outcomes rather than defining what good outcomes actually look like at each stage of the journey.  Firms should be able to trace a clear chain from evidence gathered, through decisions made, to improvements delivered, and demonstrate that interventions have actually improved outcomes.

The FCA's complaints review found that while most firms had a framework for root cause analysis, many saw completing the analysis as the end point, rather than using it to drive change.  Firms frequently did not measure whether their interventions had worked, complaints MI was not granular enough to identify outcomes for different customer groups, and data was often presented to committees as a reporting exercise rather than a basis for challenge and decision-making. Root cause analysis should be linked to outcomes monitoring, tracked to resolution, and its impact measured, with clear accountability for follow-up action.

In the products and services review, some firms explained how they identified customers in vulnerable circumstances but could not explain what they then did differently to meet those customers' needs.  Some target market definitions were simplistic or generic, with no evidence that product design had been adapted to address risks of harm identified for different customer segments.  Good practice includes end-to-end customer journey mapping, specific vulnerability impact assessments during product design, and using negative target markets to identify those for whom a product would be inappropriate.

The FCA found firms disclosing material fees relatively late in application journeys, spreading fee information across multiple web pages or documents, and using broad or open-ended contractual terms that left customers unable to understand what they might incur.  In the CFD review, the FCA remained concerned that overnight funding charges were not explained prominently enough in the client journey, were often disclosed only in terms and conditions or key information documents, and that mark-ups applied to those charges remained largely opaque.  Firms should test comprehension directly, including by proactively contacting customers to check whether they understand when and how charges apply.

The FCA's consumer finance review found that some firms had controls in place to address foreseeable harm from penalty charges but could not demonstrate those controls were appropriately calibrated to prevent fees accumulating for customers repeatedly moving in and out of arrears.  The FCA applied late repayment charges to approximately 28 million individual consumer credit agreements in the four quarters to Q2 2026, with wide variation in what firms considered when assessing whether those charges were "no higher than necessary" under CONC 7.7.5R.  Firms should regularly review whether controls are working as intended and reduce, not simply justify, the risk of foreseeable harm.

Across multiple reviews, the FCA found that boards receive regular Consumer Duty updates but rarely challenge the information, push for further investigation or hold management accountable for specific actions.  In some cases, data appeared to be sent to committees as a tick-box exercise rather than as a basis for discussion, with no evidence of substantive debate or agreed action.  The Consumer Duty Board Champion role was introduced precisely to address this: boards should be able to evidence that they have scrutinised outcomes data, identified risks, and driven, not simply noted, management's response.

In the outcomes monitoring review, many firms referred to regular engagement with third parties but could not clearly explain how they track outcomes relevant to their own obligations across those relationships or how such engagement leads to action.  In the payments context, some firms had limited visibility of vulnerability within customer groups served by intermediaries, and engagement with intermediaries often fell short of the oversight needed to understand outcomes end to end.  Firms should require relevant MI from distribution partners, set clear expectations, and be ready to evidence that their oversight arrangements are functioning effectively.