FCA Consumer Understanding Report

Are Firms Finally Speaking Our Language?

The Financial Conduct Authority (FCA) on 13 March 2026 released a significant update on one of the four key pillars of the Consumer Duty: Consumer Understanding. 

For years, retail investors and consumers have waded through impenetrable legalese and dense terms & conditions. Under the Consumer Duty, the FCA expects firms to move beyond mere compliance and ensure customers genuinely understand the products they are buying.  

This latest report from the regulator highlights where the industry is getting it right – and where it is still failing us. 

The Headline Findings: What Investors Need to Know 

The FCA’s review focuses on how firms communicate. The goal is simple: information should be fair, clear, and not misleading, allowing us to make “effective, timely, and properly informed decisions.” 

1. Good Practice: What We Should Expect

• Layered Information: The best firms are now “layering” their content – putting the most vital information (like risks and fees) upfront, with deeper technical details available for those who want them. 

• Real-World Testing: Firms are beginning to use “A/B testing” and comprehension checks to prove that their customers understand their communications. 

• Clear Senior Accountability: The FCA noted that firms with a designated Consumer Duty lead at the board level tend to have much better consistency across their apps, websites, and letters. 

2. Areas for Improvement: The Red Flags

• Hidden Exclusions: Some firms are still burying key exclusions or high-risk warnings deep in the fine print. 

• “Set and Forget” Mentality: A major criticism was directed at firms that launch a product but fail to monitor if customers are struggling with the digital journey or dropping off at complex pages. 

• Vulnerability Blindness: Not enough is being done to test communications with vulnerable cohorts, meaning financial products, which are inherently complex, remain a barrier for many. 

Why This Matters for ShareSoc Members 

As individual investors, the Consumer Understanding outcome is our primary shield against sludge practices – design features that nudge us into making poor financial choices. 

The FCA has signalled that it will continue to use the Duty to intervene where firms are falling short. For us, this means we should expect to see: 

• Smarter Portals: More use of calculators, walkthrough videos, and plain-English summaries. 

• Balanced Promotions: Marketing that gives risks equal prominence to potential returns. 

Moving Forward 

The FCA is calling on organisations like ShareSoc to help amplify these findings. The regulator is shifting from prescriptive rules to outcome-focused supervision. If a firm’s communication leads to a poor outcome because it was too complex, it can no longer hide behind the excuse that it followed the rules. 

ShareSoc believes that the regulator is making headway through its focus on the Consumer Duty 

Have you noticed a change in the clarity of your investment platforms lately? Or are you still seeing examples of poor practice? Join the discussion on the forums 

Read the full FCA report here.