The Financial Conduct Authority has set out how financial firms can improve products and services to better meet consumers’ needs.
Three years on from the introduction of Consumer Duty, the FCA said it has seen improvements in how firms design, monitor and distribute products and services, reducing the risk that people get poor outcomes from unsuitable products.
Many firms have also improved product governance, strengthened how they monitor customer outcomes and taken greater responsibility for how products were distributed.
However, the regulator warned that when product design falls short, it can confuse or mislead, increase complaints and erode trust.
It said it found some firms could improve how they define their target markets to make sure products were suitable and work as intended from the outset, as well as identify emerging risks from unsuitable products and services which lead to poor customer outcomes.
Additionally, it said firms could improve how they oversee third parties that delivered products and services to customers on their behalf.
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.”
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