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‘Check customer understanding regularly’, FCA warns lenders

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  • 12/04/2016
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‘Check customer understanding regularly’, FCA warns lenders
Banks and building societies must ensure their customers have a full understanding of any products that are sold to them, while keeping them in mind over the lifetime of a product, the Financial Conduct Authority (FCA) says.

Following a survey of 17 retail banks and building societies, the FCA raised concerns that some firms were failing to differentiate between customer satisfaction and customer understanding of a product.

The FCA said that in general, the survey showed that firms demonstrated good practice but noted that: “It is important that firms continue to check their customers’ understanding regularly and ensure that customers are considered during the end to end life cycle of a product.”

The regulator said it plans to monitor this and will undertake further follow up work in due course.

The FCA’s survey was commissioned in response to a recommendation submitted by the Parliamentary Commission on Banking Standards regarding firms’ duty of care to customers in their approach to designing products, providing information and dealing with complaints.

Positive practices identified by the FCA included the use of education videos online and in branch to demonstrate key features and limitations of a product, the use of consumer group discussions to produce better products and one-to-one calls with complainants, often helping to result in better customer outcomes.

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