The Financial Conduct Authority has identified significant progress among financial services firms in enhancing consumer understanding through innovative digital tools and simplified communication methods. According to the regulator's latest research, companies are increasingly implementing clickable FAQs, video explainers, calculators, and summary boxes to help customers absorb complex information at their own pace.
Practical Tools for Better Comprehension
These practical tools enable customers to navigate financial products and services more effectively while improving their understanding of key steps and potential risks. The FCA's investigation examined how firms are refining their approaches to designing, testing, and monitoring communications to support informed consumer decision-making.
These improvements form part of delivering the Consumer Duty, which mandates that firms place customers at the core of their operations, including during product design and customer communication processes. Examples observed by the FCA include rigorous testing of communications with actual customers and simplifying language and layouts in critical documents such as renewal letters, arrears notices, and fee pages.
Real-World Implementation Examples
In one notable case, a smaller financial firm tested its renewal letter with a sample of customers, including two individuals with sight impairments. Feedback revealed that the original layout and headings were difficult to follow, prompting the company to introduce a large-print design, a concise 100-word summary, and clearer next steps. Following implementation, research indicated improved customer understanding and fewer complaints about unclear correspondence.
Additional examples include firms proactively contacting customers after sending revised letters to verify comprehension and comparing outcomes before and after updates to wording or layouts. Many companies now utilize clickable FAQs on their websites to gradually reveal additional information, reducing the likelihood of overwhelming customers and helping them understand complex topics through step-by-step guidance.
Clear Summaries and Data-Driven Improvements
The FCA also observed firms employing clear, easy-to-read summary sheets that accompany lengthy terms and conditions documents. These summaries present key points in straightforward language, explaining costs and charges accessibly while providing essential contact details.
Financial services providers are increasingly leveraging insights from complaints analysis, call listening exercises, and website analytics to identify areas where customers struggle, enabling swift action to address emerging problems. Specific improvements have included updating calculators after identifying customer confusion and simplifying video explainer content.
Areas Requiring Further Development
Despite these positive developments, the FCA highlighted several areas needing improvement. Some firms claimed to have tested their communications but provided minimal supporting evidence. The regulator identified cases where testing appeared superficial, conducted as one-off exercises, or was poorly documented.
Furthermore, some companies failed to test communications with individuals having accessibility needs, specific language requirements, or lower financial capability. Certain firms presented identical designs and formats to all customers without considering those in vulnerable circumstances who might have accessibility requirements, language preferences, or reduced digital confidence.
Record-keeping deficiencies were also noted, with some documentation failing to demonstrate what changes were made, why they were implemented, or their impact on customers.
Customer Satisfaction Metrics
The FCA referenced data from the Institute of Customer Service indicating improvements in customer satisfaction within banking and insurance sectors. The latest UK Customer Satisfaction Index awarded banks and building societies a satisfaction score of 81.6—the highest level ever recorded. Insurance providers received a score of 79.7, representing an annual increase of 2.2 points.
Additional research suggested approximately 73% of people believe their bank or insurance provider cares about them as customers. However, the FCA's 2024 Financial Lives Survey revealed that 12% of adults—equating to roughly 6.3 million people across the UK—possessed limited understanding of the financial products they held, while 19% (approximately 10.3 million people) demonstrated low confidence with everyday numeracy.
Industry Perspectives on Progress
Charlotte Clark, director of cross-cutting policy at the FCA, emphasized the connection between clarity and trust: "When consumers clearly understand what they are buying, what it will cost and how it works, trust follows. Improving consumer understanding isn't just about compliance—the good practice we've seen shows that when firms focus on real customer experience they can build stronger relationships and deliver better outcomes."
Jo Causon, chief executive at the Institute of Customer Service, noted: "This FCA review highlights that firms do not need to overhaul everything overnight. Proportionate, well-targeted improvements in how information is communicated have a profound impact on consumer confidence and trust."
David Otudeko, director of regulation at the Association of British Insurers, added: "Supporting customers through challenging times sits at the heart of what insurance is for. We want people to make informed decisions about their cover, have the right protection in place, and trust their provider to support them when it matters most. Improving consumer understanding remains a key priority for us and we're working closely with our members to continue building on the progress already made through the Consumer Duty."
The FCA encourages all financial services firms to review the examples in their publication and consider how they can strengthen their approaches to consumer understanding, using evidence to drive continuous improvement across the industry.
