Under the Consumer Duty, firms should not assume that customers understand the information they are given, even where communications appear clear on the surface. The FCA expects firms to take a proactive approach to evidencing customer understanding through meaningful insight and testing.
This means looking beyond whether information has been issued, and instead considering whether it has been understood and acted upon correctly. Firms should be able to demonstrate how they have satisfied themselves that communications are working in practice.
Management information plays a key role in this process. Complaints, call monitoring, customer journeys and behavioural data can all help identify where customers may be misunderstanding key information or struggling to engage with content.
Where gaps are identified, firms should take action and be able to evidence what has changed as a result. Importantly, this should not be a one-off exercise but part of an ongoing feedback loop that continuously improves customer understanding.
