Consumer Duty: key lessons from the FCA's review of products and services

InsightsFinancial services insights

Consumer Duty of products and services

6 August 2026
The FCA's latest review of the Consumer Duty products and services outcome shows that while firms have strengthened product governance, the focus is now on demonstrating measurable improvements in customer outcomes.

Drawing on a review of 38 firms across banking, insurance, payments, investments and consumer finance, the publication provides insight into what good looks like and the areas where firms continue to face challenges. As with the FCA’s other good/poor practice publications, it highlights examples that are specific to smaller firms. The FCA's findings can be grouped into five key focus areas, highlighting examples of good practice as well as areas where firms may wish to strengthen their approach. These include:

Understanding target markets

  • Using customer insights to understand customer needs and objectives.
  • Assessing foreseeable harm through target market and product testing activities.

Embedding vulnerability into product design

  • Adapting products, services and customer journeys to meet diverse customer needs.
  • Considering accessibility and inclusivity throughout the product lifecycle.

Monitoring customer outcomes

  • Using customer feedback and behaviour data to identify emerging risks.
  • Using management information to drive product and service improvements.

Demonstrating the impact of change

  • Measuring whether interventions have improved customer outcomes.
  • Using evidence to assess the effectiveness of actions taken.

Strengthening distribution oversight                                                    

  • Monitoring customer outcomes throughout the distribution chain.
  • Maintaining effective oversight of distributors and third parties.

Detailed findings

1. Target market identification remains a key area of focus

Good practice

Areas for improvement

Understanding customer needs

  • Using customer research and behavioural insights to understand customer needs, objectives and likely behaviours.
  • Developing customer personas or profiles to support product design and target market assessments.
  • Defining “negative target markets” to identify customers for whom products may not be appropriate.

Product testing and assessment

  • Conducting customer impact assessments to identify potential harms.
  • Mapping customer journeys end-to-end to assess risks and mitigants.
  • Incorporating vulnerability impact assessments into product approval processes. 

Target market definition

  • Defining target markets in overly broad or generic terms.
  • Failing to demonstrate why products are appropriate for higher-risk customer groups.
  • Limited evidence linking customer insight and risk assessments to product design decisions. 

Smaller firms - example

The FCA highlighted a smaller firm that supplemented customer feedback and complaints data with insights from experienced frontline staff. Feedback was shared directly with senior management, helping the firm better understand customer needs and challenge whether its target market remained appropriate.

2. Vulnerability considerations should be embedded throughout the product lifecycle

Good practice

Areas for improvement

Inclusive product and service design

  • Redesigning customer documentation to improve clarity and accessibility.
  • Introducing accessibility features such as voice-control functionality and sign-language support.
  • Developing products and services that reduce the risk of financial abuse and other foreseeable harms.
  • Considering vulnerability throughout product development and review processes.

Customer engagement

  • Using inclusive design panels involving customers and charitable organisations to challenge assumptions and improve accessibility.
  • Gathering feedback directly from customers to shape product and service design. 

Translating insight into action

  • Focusing primarily on identifying vulnerable customers through flags, referrals or signposting arrangements.
  • Providing limited evidence of how products, services or customer journeys were adapted once vulnerabilities had been identified.
  • Treating vulnerability as a support process rather than a product design consideration.

Smaller firms

The FCA recognised that smaller firms may not have the resources to establish formal customer panels or extensive testing programmes. However, firms were still able to demonstrate good practice through customer feedback, operational insight and close engagement with customer-facing staff.  

3. Better monitoring drives better outcomes

Good practice

Areas for improvement

Outcome monitoring

  • Using customer feedback, behavioural insights and product usage data to assess outcomes.
  • Expanding management information beyond complaints reporting.
  • Identifying emerging risks through customer outcome monitoring.

Driving improvement

  • Using insights to improve product design, customer communications and service delivery.
  • Combining complaints analysis with broader outcome-focused management information.
  • Using customer outcome data to inform governance and decision-making. 

Use of management information

  • Over-reliance on complaints data as an indicator of customer outcomes.
  • Failing to use management information proactively to identify emerging risks.
  • Limited evidence that management information was being used to drive meaningful action and improvements.  

Smaller firms – example

The FCA highlighted a smaller firm that combined operational management information with data on customer outcomes following the use of its services. This enabled the firm to assess the end-outcome that customers received, rather than focusing solely on whether the service had been delivered correctly. 

4. Firms need to demonstrate the impact of change

Good practice

Areas for improvement

 Measuring success

  • Using customer feedback and monitoring activities to identify opportunities for improvement.
  • Implementing changes to products, communications and customer journeys.
  • Measuring outcomes following interventions and demonstrating tangible improvements. 

Evidencing outcomes

  • Implementing changes without defining measures of success.
  • Limited evidence that interventions resulted in improved customer outcomes.
  • Relying on assumptions, anecdotal feedback or popularity rather than measurable results.

5. Product governance extends beyond product design

Good practice

Areas for improvement

Distribution oversight

  • Ensuring distribution strategies are appropriate for the target market. 
  • Monitoring whether products continue to reach the intended customer groups. 
  • Taking action where customer harm is identified.

Governance across the distribution chain

  • Maintaining oversight of distributors and third parties. 
  • Sharing information across the distribution chain to support good customer outcomes. 

Third-party oversight

  • Insufficient visibility of customer outcomes throughout the distribution chain. 
  • Weak governance arrangements over third-party activities.
  • Limited information available to assess whether products continue to meet customer needs. 

Next steps for firms

The FCA's review highlights that, while many firms have strengthened their product governance frameworks, opportunities remain to further embed customer outcome considerations throughout the product lifecycle.

The publication provides an opportunity for firms to assess their product governance arrangements, considering whether they can evidence that their products and services meet customer needs and deliver good outcomes.

As the FCA continues its programme of Consumer Duty reviews, we can expect increasing supervisory focus on demonstrating that product governance activities deliver meaningful improvements.

 

To understand what the review means for your firm, contact our experts today.

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