FCA finds widespread product design failings in Consumer Duty review but points to measurable improvements where firms have engaged seriously

The Financial Conduct Authority (FCA) has published findings from a review of how financial firms are designing, monitoring, and distributing products and services under the Consumer Duty, the regulator's flagship conduct standard that requires firms to deliver good outcomes for retail customers. The review found genuine improvement in some areas: one firm reduced complaints about ATM withdrawals by 45% in three months after making its app information clearer and improving staff training. Many firms had strengthened product governance frameworks, improved their monitoring of customer outcomes, and taken greater responsibility for how products reach end consumers through distribution chains. However, the FCA identified three recurring areas of failure. First, some firms were defining their target markets too broadly, meaning products were being sold to consumers for whom they were unsuitable. Second, firms were slow to identify emerging risks from unsuitable products before those risks caused poor customer outcomes. Third, oversight of third parties, meaning the intermediaries and distributors that deliver products to customers on the firm's behalf, remained inconsistent. Charlotte Clark, Director of Cross-cutting policy at the FCA, stated that consumers should be able to trust that products are designed for their needs, monitored properly, and deliver expected outcomes. Rebecca Deegan, Director at Fair By Design, welcomed the report as a practical contribution to improving consumer outcomes, particularly highlighting the use of inclusive design principles. The findings signal that the FCA is moving from the implementation and guidance phase of Consumer Duty into a period of active scrutiny, with enforcement likely to follow for firms that continue to fall short.