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The FCA’s recent publication,
08/05/26
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FCA Consumer Understanding: moving from good intentions to regulator‑ready evidence
The FCA’s recent publication, Consumer Understanding: good practice and areas for improvement, is a timely reminder that Consumer Duty compliance is no longer assessed solely on intent. As supervisory focus deepens, firms must be able to evidence how their communications, customer journeys and governance actively support consumer understanding in practice and over time, rather than relying on design intent or proxy indicators such as sales performance or the absence of complaints.
Consumer understanding is a priority under the Consumer Duty. This guidance, referenced in the FCA’s Annual Work Programme, brings together examples of good and poor practice to help benchmark and identify where firms need to strengthen their approach.
The FCA’s regulatory guidance
Effective consumer understanding goes beyond clear language or well‑designed documentation. Good practice firms are those that can demonstrate how they identify consumer friction, test understanding, and make evidence‑led changes, supported by strong governance and oversight.
The FCA’s good practice examples point to an end‑to‑end control loop: using insight to identify where consumers struggle, testing communications with real customers, making targeted changes, and monitoring whether those changes have demonstrably improved understanding, supported by clear governance and oversight.
In contrast, poor practice often reflects fragmented insight, limited testing, or a reliance on assumptions about what consumers “should” understand, rather than proof of what they actually do understand.
From a compliance advisory perspective, this reflects a broader shift in Consumer Duty supervision: firms must now show not just that controls exist, but that they are working as intended and improving outcomes over time.
Key takeaways from the FCA’s good practice examples
Drawing on the FCA’s findings and TCC’s experience, several themes stand out:
Insight and MI
Good practice firms use multiple, complementary sources of management information to understand consumer behaviour and comprehension, including call listening, chat transcripts, drop‑off data, complaints and customer surveys. Crucially, this insight is reviewed regularly and used to prioritise meaningful improvements rather than cosmetic changes.
Testing communications with real customers
The FCA stresses the importance of testing communications with real customers both before and after changes are made, so firms can evidence that understanding has improved, not merely that content has been reviewed or signed off.
Clear, simple and accessible communications
Strong examples include layered content, a clear visual hierarchy and prioritisation of key information. Firms are expected to think about how information is presented, not just what is included. This reinforces that consumer understanding is not just a copywriting exercise, but a design and journey consideration.
Vulnerability and accessibility
Supporting vulnerable customers is a recurring theme. Good practice involves tailored approaches, early identification of needs, and embedding accessibility considerations into areas – including communications, journeys and governance. The FCA treats vulnerability and accessibility as a core consumer understanding risk, not an exception. Firms are expected to demonstrate how these considerations are embedded into testing, design decisions and governance, rather than addressed reactively.
Financial promotions
Balanced presentation of risks and benefits, avoidance of jargon, and testing of consumer comprehension underpin effective financial promotions aligned to the Consumer Duty.
Governance and oversight
Perhaps most importantly, good practice is underpinned by strong governance. The FCA expects clear ownership, regular MI review, documented decision‑making and demonstrable senior management oversight, enabling firms to evidence how consumer understanding risks are identified, escalated and addressed.
What does this mean for firms?
Consumer Understanding remains a high‑priority outcome under the Consumer Duty, and firms should treat this publication as a prompt for action where evidence is not yet robust – and as a sense‑check against current Consumer Duty implementation, particularly in relation to consumer understanding.
Key questions firms should be asking now include:
- Can we evidence where consumers struggle across key journeys and products?
- Are we testing communications proportionately and acting on the results?
- Is vulnerability embedded into design, testing and oversight – not treated as an exception?
- Can senior managers clearly articulate how consumer understanding is governed and monitored?
Where gaps are identified, firms should take prompt and proportionate action to strengthen controls and documentation.
How TCC can support
TCC works with firms to help translate Consumer Duty expectations into practical, evidence‑led frameworks. Our compliance experts support firms to:
- Review MI, insight and testing approaches against FCA good practice
- Assess governance and SM&CR accountability for consumer understanding
- Identify gaps and prioritise remediation activity
- build regulator‑ready evidence that demonstrates outcomes, not just activity
Our focus is on helping firms move from compliance intent to defensible delivery.
Want to sense‑check your Consumer Duty approach?
If you would like an independent view on how your consumer understanding framework aligns with FCA expectations, speak to TCC about a targeted compliance advisory review.