FCA Points to Account Closures and Affiliate Cuts as Consumer Duty Good Practice

The Financial Conduct Authority (FCA) published findings today (Monday) from a review of how firms monitor customer outcomes, and pointed to a provider of high-risk products that closed accounts held by customers who had borrowed money to trade. The regulator listed the approach as good practice under the Consumer Duty.

Fifty-six firms answered the survey behind the findings, alongside board reports and responses to FCA information requests. The regulator named none of them and gave no breakdown by sector.

Deposit-to-Income Screening Enters the Good Practice Column

The firm used a financial vulnerability indicator to pick out customers whose net deposits ran high against their declared income, according to the review. Anyone above its internal threshold was then reviewed case by case.

That review took in each customer’s wider financial profile, declared wealth and trading history. Where customers had borrowed to fund their trading, the firm closed the account. Where deposits arrived frequently, it checked on the customer’s welfare.

The review does not say whether the provider sold contracts for difference, spread bets or another high-risk product. UK CFD brokers stay inside the Duty’s scope, and the FCA has already named CFD providers across its consumer investment priorities.

Affiliate Channels Come Under Outcomes Scrutiny

A second firm tested data on rejected applicants to check whether its distribution channels were reaching the target market. Some channels were sending through high volumes of applicants who lacked the income or savings for the product.

The firm ended two paid affiliate relationships as a result, the FCA said. The regulator described the step as prompt action that cut the risk of customers being offered unsuitable high-risk products.

Broker acquisition through affiliates has drawn regulatory attention on advertising standards for years. Outcomes monitoring applies a different test to the same relationships, because the question is who the channel delivers, not what the advert says.

Charlotte Clark, the FCA’s director of cross-cutting policy and strategy, wrote in a blog published alongside the review that “The firms making the strongest progress aren’t necessarily collecting more information.”

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Duty Scrutiny Tightens as Wholesale Firms Get Relief

The FCA narrowed the Duty’s reach for business-to-business providers in June, exempting genuinely non-UK businesses whose clients had no reasonable expectation of UK protection.

Retail-facing firms sat outside that carve-out. One broker put its first-year Duty compliance increase at 25%.

When the rules first took effect, 61% of CFD providers told the FCA they expected to comply fully by the deadline, against 86% across all other sectors.

AI Tools Move Into Vulnerability Detection

One firm in the review added in-app chat after customer feedback showed people wanted a way to raise queries outside the formal complaints process. It later layered AI on top to route queries, using keyword recognition to spot possible vulnerability and escalate those cases.

Average first response time fell from 22 hours to under two minutes over six months, and average resolution time fell from four days to under three hours, the FCA said. Another firm piloted an AI tool that scored communications for comprehension risk and reported results largely matching human testing.

Sheldon Mills led a separate FCA review of AI in retail financial services that landed earlier this month. That report stopped short of recommending new rules.

Boards Approve Reports Without Challenging Them

Boards receive regular updates on customer outcomes and are described as central to oversight, the review found. Many focus on reviewing and approving reports instead of challenging them or pushing for further action.

Firms also tend to describe the governance structures they have, without showing how issues move through them or how decisions get made. Clark wrote that “effective governance is about more than reviewing reports.”

Some firms could not produce a complete audit trail from spotting an issue through to action and outcome, the review said. Others set thresholds for complaints and file review pass rates but could not explain what those thresholds were based on. A 2025 assessment of the Duty’s first two years found similar gaps between stated compliance and evidence of change.

The FCA tied the weaker findings to PRIN 2A.9, the Duty’s monitoring rule, and to Chapter 11 of its guidance FG22/5. On remediation, the review said a new tool or checklist by itself does not necessarily show that customer outcomes have improved.

This article was written by Damian Chmiel at www.financemagnates.com.