The FCA’s review of 56 firms highlights good practice in financial vulnerability screening, affiliate oversight and AI-assisted support, while identifying weaknesses in board challenge, thresholds and audit trails.
The UK Financial Conduct Authority (FCA) has published the findings of a review into how firms monitor customer outcomes, identifying as good practice under the Consumer Duty framework one high-risk product provider’s decision to close the accounts of customers who used borrowed funds to finance their trading. A total of 56 firms participated in the survey, while the review also considered board reports and firms’ responses to FCA information requests. The regulator did not name any firms or disclose data by industry segment.
(Source: UK Financial Conduct Authority,Consumer Duty Customer Outcomes Monitoring Review, review findings and good-practice section.)
Deposit-to-Income Ratio Screening Identified as Good Practice
According to the review, the firm concerned used financial vulnerability indicators to identify customers whose net deposits were high relative to their declared income. Any customer exceeding an internal threshold was subjected to an individual review covering their overall financial circumstances, declared wealth and trading history.
The firm applied different measures depending on the circumstances:
Customers who used borrowed funds to finance their trading had their accounts closed;
Customers making frequent deposits underwent further verification of their financial circumstances;
Every customer exceeding the threshold entered an individual review process rather than being handled solely through automated rules.
The review did not state whether the provider offeredCFDs, spread betting or other high-risk products. UK CFD brokers remain within the scope of the Consumer Duty, and the FCA has identified several CFD providers in its consumer investment priorities.
Affiliate Channels Subjected to Outcomes Review
Another firm analysed data relating to rejected applicants to assess whether its distribution channels were reaching the intended target market. The review found that some channels referred large numbers of applicants who lacked the corresponding income or savings and were therefore unsuitable for the product. The FCA said the firm subsequently terminated two paid affiliate relationships.
The regulator described this as timely action that reduced the risk of customers being offered unsuitable high-risk products. Brokers’ use of affiliate channels for customer acquisition has faced regulatory scrutiny under advertising standards for many years, but outcomes monitoring applies a different test to the same relationships—the central question is what type of customers the channel delivers, rather than the content of the advertising itself.
Good Practice and Weaknesses Identified by the Review
| Area | Firm Practice | FCA Assessment | Relevant Rule or Basis |
|---|---|---|---|
| Financial vulnerability screening | Screening based on the ratio of net deposits to declared income, followed by individual reviews and the closure of accounts belonging to customers trading with borrowed funds | Identified as good practice | Consumer Duty customer outcomes requirements |
| Distribution channel monitoring | Analysis of rejected applicant data and termination of two paid affiliate relationships | Recognised as timely action that reduced the risk of unsuitable sales | Target market and outcomes monitoring requirements |
| Board governance | Most boards merely reviewed and approved reports, with limited challenge or action | Identified as a weakness | PRIN2A.9 |
| Thresholds and audit trails | Some firms set thresholds for measures such as complaint rates but could not explain their basis and lacked complete audit trails | Identified as a weakness | Chapter 11 ofFG22/5 |
Consumer Duty Scrutiny Tightens as Wholesale Firms Receive Exemptions
In June 2025, the FCA narrowed the application of the Consumer Duty to business-to-business (B2B) providers, exempting firms genuinely based outside the UK where their customers could not reasonably expect to receive UK protections. Firms serving retail customers were not included in the exemption.
In relation to compliance costs, one broker estimated that its Consumer Duty compliance costs increased by 25% in the first year. When the rules first took effect, there was a clear gap in compliance preparedness across the relevant sectors:
61% of CFD providers told the FCA that they expected to be fully compliant by the deadline;
The corresponding proportion across all other sectors was 86%.
AI Tools Enter the Vulnerability Identification Process
One firm included in the review introduced an in-app chat function after customer feedback indicated that people wanted a way to raise queries outside the formal complaints process. It subsequently added artificial intelligence to triage enquiries, using keyword identification to detect potential signs of vulnerability and escalate the relevant cases.
The FCA said that, within six months, the firm reduced its average first-response time from 22 hours to less than two minutes and its average resolution time from four days to less than three hours. Another firm piloted an AI tool that assigned comprehension-risk scores to communications, reporting results that were broadly consistent with manual testing.
Sheldon Mills led a separate FCA review of the use of AI in retail financial services. The report was published in early October 2025 but did not recommend introducing new rules.
Boards Approved Reports but Provided Limited Challenge
The review found that boards regularly received updates on customer outcomes and were described as central to firms’ oversight arrangements. However, many boards focused on reviewing and approving reports rather than challenging findings or driving further action. Firms also tended to describe the governance structures they had in place without demonstrating how issues moved through those structures or how decisions were reached.
Charlotte Clark, the FCA’s Director of Cross-Cutting Policy and Strategy, wrote in a blog published alongside the review: she also wrote:
The review stated that some firms could not provide a complete audit trail from the identification of an issue through to the action taken and the outcome achieved. Other firms had established thresholds for complaint rates and file-review pass rates but could not explain the basis for those thresholds. A 2025 assessment covering the first two years of Consumer Duty implementation also identified a similar gap between stated compliance and evidence of substantive change.
Regulatory Follow-Up and Outstanding Questions
The FCA linked the weaker findings to PRIN 2A.9, the Consumer Duty monitoring rules, and Chapter 11 of itsFG22/5guidance. In relation to remediation, the review noted that the introduction of new tools or checklists alone does not necessarily demonstrate that customer outcomes have improved.
Matters yet to be confirmed include whether the FCA will take further supervisory action against individual firms on the basis of the review, the specific industry distribution of the unnamed firms involved, and how outcomes monitoring requirements will be further aligned with affiliate channel management in enforcement practice. The regulator did not provide a timetable for these matters in the review.
(Source: UK Financial Conduct Authority,Consumer Duty Customer Outcomes Monitoring Review, and the accompanying blog by Charlotte Clark, governance and remediation section.)
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