Customer understanding: still a central focus for the FCA and firms must do more
📅11 March
In it’s latest review on how firms are supporting customers in vulnerable circumstances, the FCA highlighted that most firms can do more. Improving customer understanding is essential for those striving to deliver good outcomes under the Consumer Duty.
Firms working with Plain Numbers are already showing good practice in this area. The FCA’s report pointed out that some firms have been actively including Plain Numbers in their consumer understanding work - a clear example of effective communication strategies in action.
The FCA highlights that while some firms are demonstrating good practice in this area, there’s still much room for improvement.
When talking about consumer understanding, this update doesn’t ask for anything new. But it does remind us all that consumer understanding should be a key focus. It leaves no doubt that the FCAs attention on it is here to stay.
Good practice: what firms are doing well
The FCA identified several actions that leading firms are taking to improve customer understanding:
Ensuring communications are clear – Writing in plain English, avoiding jargon, and simplifying complex information.
Communications are timely – Providing information at the right points in the customer journey, ensuring people have time to make informed decisions.
Tailoring communications – Adjusting language, format, or channels to meet the needs of different customer groups, especially those in vulnerable circumstances.
Testing customer understanding - Actively checking whether customers understand the information provided, then refining communications accordingly.
Areas for improvement
Despite this positive progress, the FCA also highlighted areas where firms are falling short. These include:
Inconsistent clarity – While some firms excel at clear communication, others continue to provide information that is difficult to understand.
Lack of tailored communication – Some firms are failing to adjust their messaging for vulnerable customers, missing the opportunity to improve engagement.
Limited testing and review – Only 3 in 10 firms are consistently testing customer understanding or using insights to improve service design and communications.
Why customer understanding matters
The Consumer Duty requires firms to support and enable customers to make informed decisions. Simply providing information isn’t enough – firms must act to ensure customers can use the information effectively.
This is important for all customers, but especially those who might be vulnerable. The impacts of poor communication are serious and can significantly impact customer well-being.
The FCA found that consumers in vulnerable circumstances are more likely to:
Struggle to access essential information
Receive unclear or poorly timed communications
Experience negative outcomes such as stress, confusion, or financial loss.
The role of Plain Numbers
Firms that partner with Plain Numbers are taking proactive steps to ensure their communications are clear, understandable, and effective. And they’re highlighting their work to the regulator.
By embedding the Plain Numbers Method into their processes, they’re simplifying complex information and improving customer outcomes - exactly the kind of approach the FCA highlighted as good practice.
As firms continue to embed Consumer Duty into their operations, there’s a clear opportunity to build on this momentum. By focusing on clarity, tailoring communications, and actively testing customer understanding, firms can improve customer outcomes and build stronger, more trusting relationships.
Key takeaway: clear numbers build trust
The FCA’s findings are a reminder that improving customer understanding is not just about compliance - it’s about creating fairer, more positive experiences for customers.
It’s also a timely reminder that neither the Consumer Duty or improving customer understanding are a one off job – firms need to continue going further.
The path forward is clear: follow the example of those leading the way by putting clear, effective communication at the heart of your customer understanding strategy.
Read the FCA’s review of customer vulnerability
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