Blog - AI Affordability Assessments and Consumer Duty

In March 2026, the Financial Conduct Authority published its review of the Consumer Understanding outcome under Consumer Duty. For lenders using AI affordability assessments, it makes for instructive reading, not because it introduces new rules, but because it describes, in practical terms, what good actually looks like, and where many firms are falling short.

The shift: from communication to evidence

The central message is clear. Firms are not being asked simply to provide information, they are expected to demonstrate that customers:

understand what they are being told
can act on it
and are supported at the right moments in their journey

This is a meaningful shift. The FCA explicitly challenges reliance on:

the absence of complaints
sales outcomes
or assumptions that “clear wording” equals understanding

Instead, firms are expected to build evidence-based, testable, and auditable approaches to communication, supported by management information, testing, and governance.

Where firms are falling short

The review identifies consistent patterns across firms:

Reactive rather than proactive approaches to vulnerability
Testing that is one-off, superficial, or poorly evidenced
Limited ability to show how insight leads to change
Governance that focuses on compliance metrics rather than comprehension

These are not edge cases. They are recurring themes and at the same time, the FCA is equally clear on what good looks like.

What good looks like in practice

Firms performing well are doing a number of things differently:

Identifying vulnerability early and at key moments of stress
Capturing accessibility needs once and applying them consistently
Testing communications with real customers, before and after changes
Using tools and journeys that actively support understanding
Producing management information that evidences comprehension, not just activity

In one example, a firm set an internal benchmark that at least 80% of customers must correctly recall key information and iterated its communications until that standard was met. This is the level of rigour the FCA is pointing towards.

Why this matters most in affordability

For lenders, these expectations land most clearly in affordability and income & expenditure assessments. These are the moments where:

customers disclose sensitive financial information
vulnerability is most likely to surface
understanding is critical to outcomes

And they are also the moments that will be most heavily scrutinised if something goes wrong. The question is no longer “Did we ask the right questions?” it’s “Can we evidence that the customer understood, and that we responded appropriately?”

A structural challenge for many firms

Traditional affordability processes were not designed with this standard in mind. They are often:

agent-led and variable
difficult to evidence consistently
reliant on interpretation rather than structure
weak in producing auditable insight

Even where technology is introduced, many solutions still sit outside the regulatory perimeter, acting as tools rather than accountable processes. That distinction is becoming more important. For firms looking to meet their AI affordability assessments Consumer Duty obligations, that distinction is now critical.

How AI affordability assessments embed regulation into the process

In a market where AI affordability assessments and Consumer Duty compliance are scrutinised, Inicio operates within the regulatory perimeter, not outside it. Inicio is an FCA-regulated provider of affordability assessments, using conversational AI to capture income, expenditure and vulnerability in a structured, consistent and auditable way. This changes the role of technology. Rather than supporting the process, it becomes the process, one that is:

consistent across every interaction
adaptable in real time to customer responses
designed to support understanding, not just data capture
capable of producing structured, timestamped evidence of customer outcomes

Every interaction generates management information that can be fed directly into governance, aligned with the FCA’s expectation that firms move towards comprehension-driven insight, not just compliance reporting.

From aspiration to evidence

The FCA’s review is not a warning shot. It is a roadmap and sets out clearly:

what firms should be doing
how they should be measuring it
and the level of evidence expected

For lenders, this raises a fundamental question: Is your affordability process designed to meet that standard or to evidence it? Because increasingly, those are not the same thing.

The direction of travel

Consumer Duty is pushing the industry beyond communication and into accountability.

Understanding is no longer assumed, it must be demonstrated and that requires processes that are structured, testable and capable of standing up to scrutiny.