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The Financial Conduct Authority has a mixed verdict on financial product design. Progress is real. But it’s patchy, and the regulator isn’t pretending otherwise.
The FCA’s review, carried out under the Consumer Duty framework, looked at three core areas: how firms design products from the start, how they monitor those products over time, and how they handle accountability when third parties do the distributing. What the FCA found was basically a split industry — some firms getting it right, others still treating governance like a box-ticking exercise rather than something woven into daily operations.
Not a clean bill of health.
Where Firms Are Actually Getting It Right
Some of the examples the FCA pulled out are worth slowing down on. One firm offering appliance insurance started providing temporary mini fridges to customers who needed cold storage for medication while waiting on a repair. Small thing, maybe. But it’s the kind of design decision that shows a company actually thought about who its customers are and what they need in a crisis moment, not just what the policy document says.
A bank cut ATM withdrawal complaints by 45% — that’s a real number — by making app information clearer and giving staff better training. It didn’t require a product overhaul. It required someone paying attention to where friction was building up and doing something about it.
And a third firm tackled financial abuse head-on by introducing a special debit card for caregivers. The card removed the need for caregivers to access the original card and PIN of the person they were looking after. That’s a genuinely clever design fix for a problem that probably wasn’t on anyone’s radar five years ago.
These aren’t small wins. They’re the kind of outcomes Consumer Duty was supposed to produce.
The Consistency Problem the FCA Can’t Ignore
But here’s the issue. Those examples are highlights, not the norm. The FCA’s own assessment is pretty clear that consistency is still lacking across the industry. Some companies have thoroughly built consumer-focused thinking into how they operate. Others are lagging, and the gap between the two groups seems wide.
One recurring problem is target market definition. The FCA found that while some firms do a strong job identifying specific consumer groups and designing products to match, others are still working from broad, generic categories. That lack of precision matters. If a firm can’t say with confidence who a product is actually for, it probably can’t assess whether the product is working for those people either.
Monitoring is another weak spot. Lots of firms are collecting data — customer feedback, behavioral signals, complaints data, the usual mix. That part has improved. But collecting data and actually doing something with it are two different things, and the FCA found that the ability to translate insights into real changes stays inconsistent. Some firms escalate findings through governance structures effectively. Others let insights stall somewhere between the data team and the people who could act on them.
Third-party distribution is probably the murkiest area. The FCA saw improvements — clearer expectations being set for distributors, better information sharing. Good. But some firms still don’t have full visibility over what’s happening once a product leaves their hands and moves through a distribution channel. That’s a problem, because poor outcomes in that part of the chain can go undetected longer than they should.
What the FCA Wants Firms to Do Next
The regulator isn’t calling for a revolution. The message is more practical than that. Firms should look at the stronger examples in the industry — including the ones the FCA has now put on record — and figure out what’s transferable to their own setup. Size matters. A large bank and a small insurance firm aren’t going to implement governance in the same way, and the FCA seems to get that. The push is to tailor, not to copy.
Product governance can’t stay a compliance function sitting off to the side. It needs to be part of how decisions get made day to day. That’s probably the clearest thing the FCA wants firms to walk away with.
And the monitoring piece needs to close the loop. Data that doesn’t lead to action isn’t really serving anyone. The firms that are doing well aren’t just gathering information — they’re using it to refine products, fix customer journeys, and catch problems before they compound.
The FCA’s review doesn’t name names on the laggards. But the 45% complaint reduction at that one bank is sitting there as a benchmark now.
Frequently Asked Questions
What three areas did the FCA’s product design review cover?
The FCA looked at initial product design, continuous monitoring of consumer outcomes, and accountability for third-party distribution channels, all assessed under the Consumer Duty framework.
What was the 45% figure the FCA mentioned?
One bank reduced ATM withdrawal complaints by 45% by improving app information and providing better staff training, which the FCA cited as an example of effective monitoring leading to real change.
