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01/04/2026
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What is the FCA’s 'Consumer Understanding' and how to meet the outcome
22 May 2025
4 min read
The UK’s new Consumer Duty has introduced a tougher benchmark for how financial services communicate with customers. One of its key pillars is Consumer Understanding, outlined in Section 8 of the FCA’s finalised guidance (FG22/5). It asks a crucial question:
Do your customers genuinely understand what they’re agreeing to?
What the FCA expects
The FCA’s intention is clear:
"Firms should support consumer understanding by presenting information in a way that helps consumers make effective, timely and properly informed decisions" (FG22/5, 8.1)
The guidance outlines several specific expectations:
- Clarity and relevance (8.4 to 8.6): Communications should use plain and intelligible language. Firms must avoid jargon, remove ambiguity, and focus on what really matters to the consumer. The content should be adapted to suit the target audience’s needs, knowledge and circumstances.
- Layered and engaging presentation (8.7 to 8.9): Rather than overwhelming customers with large blocks of text, information should be presented in layers. This can include summaries, visual elements, and interactive features to help customers engage with the content meaningfully.
- Right time, right context (8.10 to 8.11): Important information must be provided before a consumer makes a decision. It should be timely and delivered in a way that fits naturally into the customer journey, giving the consumer time to absorb it.
- Support for complex matters (8.12 to 8.14): Firms need to identify where additional support may be required, particularly for complex products or where the target audience may include vulnerable customers. This includes offering explanations, tools, or opportunities for questions.
In short, it’s no longer enough to deliver a dense document and collect a signature. Firms must show that they have genuinely helped the customer understand — and have evidence to prove it.
Why this matters
This isn’t just a theoretical shift, it addresses real-world issues:
- 91% of people consent to terms they haven’t read.
- Most contracts are written at a postgraduate reading level, far beyond the average consumer’s comprehension.
- Courts are increasingly questioning whether a signature alone is proof of informed consent.
If your business still relies on traditional PDFs, long disclosures or standard e-signature flows, you may already be out of step with regulatory expectations.
So what can you do?
Meeting the FCA’s Consumer Understanding outcome doesn’t mean tearing up your processes. But it does mean rethinking how information is delivered.
Here are some practical ways to align with the guidance:
- Use plain English: Simplify language throughout your communications, especially where legal or financial terms are involved.
- Layer your content: Start with a short summary of the key points, then allow customers to dive deeper into the details if they want to.
- Make important content stand out: Highlight key risks, rights, and obligations so customers can't miss them.
- Create space for questions: Build in ways for customers to ask questions and get responses. This helps address confusion early and builds trust.
- Engage actively, not passively: Don’t rely on a checkbox. Use interactive prompts or confirmations to test comprehension.
- Capture and retain proof: Keep a record of what was shown, what was clicked, what was asked, and how the customer confirmed their understanding.
These steps can sound time-consuming or technically complex. But they don’t have to be.
How 
i agree helps you do it all
i agree was built to help firms meet the Consumer Understanding outcome, without having to completely redesign their processes or tech stack.
Here’s how it works:
- Video summaries: Clients see a short, plain-English video that explains the key points of the agreement before reading it.
- Plain-language tooltips: Definitions for legal or technical terms appear right where the client encounters them.
- Highlighted key terms: Crucial clauses are surfaced clearly across the video, document, and prompts.
- Interactive Q&A: Customers can ask questions as they go, and your team can respond. Every interaction is logged.
- Spoken confirmation: Instead of a checkbox, the client gives a verbal confirmation of their understanding, creating a stronger audit trail.
- Full digital record: Every step is tracked — what was seen, what was asked, what was confirmed.
With i agree, you don’t need to piece together multiple tools or rebuild your workflows. Everything is handled in one clear, compliant process.
From obligation to opportunity
The FCA is asking firms to go beyond disclosures and focus on real comprehension. That might sound like a big shift but it’s also a major opportunity.
By improving how you communicate and prove understanding, you not only meet the Consumer Duty, you earn your customers’ trust.
How to meet the FCA Consumer Understanding outcome
What is FCA Consumer Understanding?
What is FCA Consumer Understanding?
Consumer Understanding is part of the FCA’s Consumer Duty. It means firms must communicate in a way that helps customers make informed decisions. The focus is not just whether information was provided, but whether it was clear, timely, relevant, and understandable.
Why does Consumer Understanding matter?
Why does Consumer Understanding matter?
It matters because customers often sign or accept terms without fully understanding them. Poor communication can lead to complaints, disputes, regulatory scrutiny, and loss of trust. The FCA now expects firms to support real comprehension, not just collect signatures.
How can firms meet the Consumer Understanding outcome?
How can firms meet the Consumer Understanding outcome?
Firms can use plain English, layered summaries, highlighted key risks, accessible formats, interactive prompts, and opportunities for questions. They should also keep evidence showing what the customer saw, asked, and confirmed before agreeing.
Are PDFs and e-signatures enough for Consumer Duty?
Are PDFs and e-signatures enough for Consumer Duty?
Not always. A PDF or e-signature can show that information was sent and accepted, but it may not prove the customer understood it. Firms need a process that actively supports understanding and creates a stronger audit trail.
How does i agree help with Consumer Understanding?
How does i agree help with Consumer Understanding?
i agree help with Consumer Understanding?
i agree uses video summaries, plain-language explanations, highlighted key terms, Q&A, spoken confirmation, and a full digital record. This helps firms explain agreements clearly and evidence that the customer engaged with the information before consenting.
What evidence should firms keep?
What evidence should firms keep?
Firms should keep a clear record of what was shown, when it was shown, what questions were asked, what answers were given, and how the customer confirmed understanding. This evidence can support compliance and reduce dispute risk.
