Firms across financial services are taking positive steps to help customers understand their products and services, with methods such as “clickable FAQs”, calculators, video explainers, and summary boxes to break down complex processes, the City regulator has found.
These tools let customers absorb information at their own pace and make it easier for them to understand key steps or risks, the Financial Conduct Authority (FCA) found.
Its research looked at ways that firms are improving the way they design, test and monitor communications, helping customers to make informed decisions.
The improvements are part of delivering the Consumer Duty, which requires firms to put customers at the heart of what they do, including when designing products and communicating with customers.
Examples of firms making improvements seen by the FCA include testing communications with customers and simplifying language and layouts in key communications such as renewal letters, arrears notices and fee pages.
In one example, a smaller firm tested its renewal letter with a sample of customers, including two with sight impairments.
Feedback showed the layout and headings were hard to follow and the firm introduced a large‑print design, a 100‑word summary, and clearer next steps.
After launch, research indicated a better understanding and fewer complaints about unclear letters.
Further examples included firms calling customers after sending revised letters to check people’s understanding and comparing outcomes before and after updates to wording or layouts.
Some firms also use “clickable FAQs” online to reveal additional information customers need, reducing the chances of them being overwhelmed and helping them to understand complex topics step-by-step.
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The FCA also saw evidence of firms using clear, easy‑to‑read summary sheets to sit on top of lengthy terms and conditions. These summaries help to present the key points in straightforward language, by explaining costs and charges in an accessible way and providing contact details, for example.
Firms also used insight from complaints, call listening and website analytics to identify where customers struggle, and act quickly to address problems.
Examples of improvements included updating a calculator after identifying customer confusion and simplifying a video explainer.
The FCA also highlighted areas for improvement.
Some firms said they had tested their communications but provided little evidence. The regulator said it saw cases where testing was often superficial, one-off or poorly documented.
And some did not test communications with people with accessibility needs, language requirements or lower financial capability. Some firms presented the same design and format to all customers without consideringcustomers in vulnerable circumstances who may have accessibility needs, language preferences or lower digital confidence, the regulator said.
Some records also failed to show what had been changed, why it was changed, or the impact on customers.
The FCA also highlighted figures from the Institute of Customer Service, which indicate improvements in customer satisfaction with banking and insurance firms.
Its latest UK customer satisfaction Index (UKCSI) gave a satisfaction score of 81.6 for banks and building societies – the highest level it has recorded. Satisfaction with insurance providers received a score of 79.7 – an annual increase of 2.2 points.
Research also indicated that around 73% of people feel their bank or insurance provider cares about them as a customer.
The FCA’s 2024 Financial Lives Survey found that 12% of adults, equating to around 6.3 million people across the UK, had a limited understanding of the products they held and 19%, equating to 10.3 million, had low confidence with everyday numeracy.
Charlotte Clark, director of cross-cutting policy at the FCA, said: “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, said: “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 (ABI), said: “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 wants firms generally to review the examples in the publication and consider how they can strengthen their own approaches to consumer understanding, using evidence to drive continuous improvement.
