The FCA has raised the bar on Consumer Duty. Discover how AI affordability assessments can help lenders evidence the Consumer Understanding outcome. 

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 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.

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.

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.

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?”

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.

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.

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.

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.

Affordability assessments are among the highest-stakes interactions in the customer journey, they are where:

• vulnerability must be identified
• understanding must be clear
• and decisions must be defensible

As expectations continue to rise, the firms that succeed will not be those that say the right things but those that can prove them.

If you’d like to explore how Inicio supports firms in evidencing the Consumer Understanding outcome, we’d be happy to continue the conversation.

Finclusion Introduces Innovative Assessments at the Start of the Customer Journey

The UK motor finance sector is undergoing one of the most significant periods of reflection and change in its history. For lenders, the question of how AI affordability assessments can support responsible lending in motor finance has never been more pressing.

In recent years, questions around affordability, transparency, and customer outcomes have moved sharply into focus. Large-scale redress schemes and increased regulatory scrutiny have highlighted the need for lenders to demonstrate not only compliance, but genuine understanding of a customer’s ability to sustain borrowing.

This moment is not just about addressing the past. It is about shaping the future.

Against this backdrop, a new generation of lenders is emerging, organisations building their models around responsible lending from the outset, rather than adapting retrospectively. Finclusion is one such lender, using AI affordability assessments in motor finance.

As a new entrant to the motor finance market, Finclusion has made a deliberate decision to embed affordability assessments at the very start of the customer journey, working in partnership with Inicio AI.

This marks a significant departure from traditional approaches, where affordability assessments have often relied heavily on only indirect data sources such as credit files, scorecards, and income estimates.

Finclusion is introducing conversational affordability assessments creating an additional transparent and structured way to understand a customer’s financial position before lending decisions are finalised.

This allows affordability to be assessed not simply as a compliance checkpoint, but as a meaningful part of responsible lending.

Inicio’s conversational AI platform has historically been deployed to support customers during periods of financial difficulty, helping lenders engage sensitively, understand individual circumstances, and agree sustainable outcomes.

Finclusion’s implementation represents a new and important evolution.

By introducing Inicio’s affordability solution at origination, Finclusion is proactively building deeper financial understanding into the lending process itself. 

This shift moves affordability from a reactive exercise to a proactive foundation.

It reflects a belief that better conversations at the start of the journey can lead to better outcomes throughout the life of the agreement.

As regulatory expectations continue to evolve, AI affordability assessments in motor finance are becoming a critical tool for lenders needing to demonstrate not only that affordability has been assessed, but that it has been assessed appropriately.

Finclusion’s approach reflects a forward-looking perspective, recognising that responsible lending is not just about meeting regulatory requirements, but about building sustainable relationships with customers.

By embedding conversational affordability from the outset, Finclusion is helping to establish a model built on clarity, understanding, and transparency.

Inicio is proud to support Finclusion in this important step.

This partnership reflects a shared commitment to improving how affordability is understood and assessed, ensuring customers are supported appropriately from the very beginning of their journey.

As the motor finance sector continues to evolve, initiatives like this demonstrate how technology and lender intent can work together to set new standards for responsible lending.

We’d be happy to continue the coversation.