The Financial Conduct Authority (FCA) has found that financial firms are taking positive steps to design products and services around customers, making them more inclusive and better meeting their needs, according to a review of how the Consumer Duty is working.
Positive Examples of Inclusive Design
Examples in the review included a firm providing mini fridges temporarily to customers who needed one for their medication, and another firm introducing voice control in its app for customers with dexterity issues. In another case, a firm created a version of a supplementary debit card limited to a specific pot of money, allowing caregivers to purchase essentials without handing over the original card and PIN, reducing the risk of abuse.
Additionally, a firm identified that customers were often confused by unclear merchant names in their transactions, leading to anxiety about fraud. The firm adopted a new data tool that instantly translated data into recognisable merchant names and logos.
Consumer Duty Standards
The Consumer Duty, introduced in 2023, sets higher standards for financial services customers. It requires firms to put customers at the heart of what they do, including when designing products, communicating, and considering whether customers are in a vulnerable situation due to poor health or financial difficulties. Firms must ensure the design of products and services meets the needs, characteristics, and objectives of customers in the target market.
The FCA said many firms started their product or service design process by researching prospective customers’ needs, characteristics, objectives, and likely behaviour. Some businesses also used a “negative target market” to identify customers for whom the product or service would not be appropriate.
Impact of Good and Poor Design
The regulator said that when products are designed with consumers’ needs firmly in mind, they can help people make informed choices, get fair value, and receive support to navigate their financial lives. However, when product design falls short, it can confuse or mislead, increase complaints, and erode trust.
The FCA included examples in its report to help firms learn from each other and improve compliance. It found some firms could improve how they define their target markets to ensure products are suitable and work as intended. Some firms could also improve how they oversee third parties delivering products and services to consumers on their behalf, and some need to give more consideration to meeting the needs of vulnerable customers once identified.
Quotes from Officials
Charlotte Clark, director of cross-cutting policy at the FCA, said: “Consumers should be able to trust that the products and services they rely on to navigate their financial lives are designed for their needs, monitored properly, and deliver the outcomes they expect. The good practice we’ve found really matters because where products are poorly targeted, or firms lose sight of what’s happening across their distribution chains, consumers can lose out – whether that’s poorly performing products, slow complaint resolution, or paying for services that don’t meet their needs.”
Rebecca Deegan, director at Fair By Design, said: “At Fair By Design, we see the everyday impact when products and services aren’t designed around people’s lives, and how it can contribute to financial exclusion and the poverty premium. This report is a welcome and practical contribution to improving consumer outcomes. The examples it highlights, including the use of inclusive design principles, show how firms can move beyond identifying vulnerability to designing, monitoring and adapting services that work better for everyone.”
