What does clear, fair and not misleading mean in a customer email?

In February 2020 the FCA fined a UK motor finance provider £2.77 million (roughly €3.3 million) over its treatment of customers who fell behind on payments. The firm had already paid more than £30 million in redress to 5,933 customers. Buried in the press release is the sentence that matters most to anyone who writes to customers for a living: the firm “did not communicate the likely financial consequences of failing to keep up with payments to customers in a way which was clear, fair and not misleading.”

The failure sat in ordinary correspondence: what customers were told when they asked what would happen next. More than 1,400 of them defaulted after agreeing repayment plans they could not sustain.

Firms treat “clear, fair and not misleading” as a rule about marketing. It is checked when a product page goes live, a campaign is signed off, a promotion is approved. The rule reaches considerably further than that, and the place it bites hardest is the reply a customer service agent writes in ninety seconds.

The rule covers the reply, not only the brochure

Two separate parts of the FCA Handbook apply here, and both use language that is broader than most sign-off processes assume.

COBS 4.2.1R requires a firm to ensure that “a communication or a financial promotion is fair, clear and not misleading.” The rule names communications to a customer as a separate category from financial promotions, so a one-to-one email about an existing product sits inside it. COBS 4.2.1R(3) adds that the firm must take into account the nature of the client, and the guidance at COBS 4.2.2G confirms the rule applies proportionately to “the means of communication”, which includes a short email.

PRIN 2A.5, the Consumer Duty outcome on consumer understanding, is even more explicit about scope. PRIN 2A.5.1R applies it to “all communications throughout a firm’s interactions with retail customers”, including before, during and after any sale, and to interactions that do not relate to a specific product at all. It covers communications “including verbal, visual or in writing, from a firm to a retail customer, regardless of the channel used”, naming electronic communications directly.

PRIN 2A.5.3R then sets the standard: communications must meet customers’ information needs, be likely to be understood, and equip customers “to make decisions that are effective, timely and properly informed”. The same rule repeats the formula, that a firm must communicate “in a way which is clear, fair and not misleading”.

Read together, the position is simple to state and uncomfortable to operationalise. Every email a firm sends a retail customer is in scope. The promotion went through legal. The reply did not.

The four moments where it goes wrong

Across financial services, insurance and payments, the same four moments produce most of the exposure. In each one the commercial instinct and the regulatory requirement pull in opposite directions, and the person writing has seconds to choose.

1. Explaining a delay

A customer asks why a payment, claim or application is taking longer than expected. The reassuring answer is that everything is fine and it will be resolved shortly. The agent does not know that it will. Reassurance offered without a basis is the clearest route to a communication that was not fair.

2. Describing what a product does

A customer asks whether they are covered, whether the rate holds, whether their money is safe. A short answer flattens conditions and exclusions into something that reads as a promise. This is the ground we covered in suitability language and promising fit, and it is the same mechanism here.

3. Responding to a complaint

The instinct is to close the matter warmly. A sentence that concedes the outcome without stating the reasoning, or that implies a remedy the firm has not agreed, creates a record the firm has to live with. The admission problem is worked through in admissions in customer service email.

4. Explaining the consequences of falling behind

This is the moment the £2.77 million case turned on. A customer in difficulty asks what happens if they cannot pay, or what their options are for exiting. The answer that keeps the conversation calm leaves out termination costs, the effect on the credit file, or the fact that a short plan will not clear the arrears. The FCA’s enforcement director described exactly this: the firm “did not communicate clearly to customers, in financial difficulty, their options for exiting their loans and the associated financial implications, resulting in many incurring higher termination costs.”

What the wording actually looks like

The table below takes sentences of the kind that appear in ordinary customer correspondence, names which part of the standard they fail, and gives a shorter version that carries the same commercial message without the exposure. The rewrites are deliberately small. Most of these sentences fail on one clause.

Sentence in the draft	What it fails	Safer wording
“There is nothing to worry about, your money is safe with us.”	Unsupported reassurance. Not fair under COBS 4.2.1R; does not equip a decision under PRIN 2A.5.3R(1)(c).	“Your balance is held under [scheme]. Cover is limited to [amount].”
“This plan will clear your arrears.”	States an outcome the firm has not calculated. The failure in the 2020 case.	“This plan reduces the arrears by [figure] a month. It does not clear them before [date].”
“You are fully covered for this.”	Omits conditions and exclusions, so it is likely to be misunderstood.	“This is covered when [condition]. It is excluded when [exclusion].”
“We will sort this out for you, don’t worry about the deadline.”	Implies the deadline does not apply. Creates a decision the customer cannot make properly.	“The deadline is [date]. If you need longer, tell us before then and we will look at options.”
“You can exit the agreement at any time.”	Technically true, materially incomplete. Termination cost is the information the customer needs.	“You can end the agreement. Ending it now costs [amount].”

The pattern across all five: the exposure comes from what the sentence leaves out, and the fix is a figure, a date or a condition. Firms that try to solve this with disclaimers make communications harder to understand, which is its own breach of PRIN 2A.5.3R(1)(b).

Two rules most firms have not operationalised

Two requirements in PRIN 2A.5 are rarely reflected in how customer correspondence is actually managed.

PRIN 2A.5.9R applies to one-to-one interaction: in branch, on a call, or in “other interactive dialogue”. Where appropriate, the firm must tailor the communication to that customer’s information needs, including any characteristics of vulnerability, and must ask whether the customer understands the information, “particularly if the information is reasonably regarded as key information, such as where it prompts that retail customer to make a decision”. Most email templates for arrears, claims and complaints contain no such question.

PRIN 2A.5.10R requires a firm, where appropriate, to test communications before they are sent and to monitor their impact afterwards, then to investigate and correct anything the testing or monitoring reveals. Testing is well established for campaigns. For the correspondence that carries the highest stakes, the arrears letter and the complaint response, most firms have a template library and no evidence of testing at the point where a person edits the template.

Where a pre-send check fits

Supervision and archiving tools read what was sent. They are necessary, and by the time a flagged sentence reaches a reviewer’s queue, the customer has read it too. A pre-send check sits earlier in the same chain: the sentence is checked on the writer’s screen, before the message leaves, in the seconds where a small edit is still free.

VerbaPulse is built for accidental risk, the careless line a well-intentioned person does not notice, which is the right frame for this rule. Nobody in a contact centre intends to mislead a customer in difficulty. They intend to be kind under time pressure, and the kind sentence is the one that omits the termination cost. Firms with their own wording standards can load them as custom policies so the check reflects the phrasing their own compliance team has already approved, and the department-level record sits in the audit trail without storing message content.

What the file looks like when the regulator asks

The 2020 case ended with redress to 5,933 customers, paid voluntarily, because the firm could not show that the affected population had understood the consequences of the plans they agreed to. That is the shape of the problem. A regulator examining consumer understanding asks what the firm can produce, and an internal conviction that the wording was clear produces no document.

A defensible file on written customer communications contains four things. Evidence that the wording standard exists and is specific enough to apply to a single sentence. A principle copied out of the Handbook does not meet that. Evidence that the standard was applied at the moment of writing, not only at template sign-off, which means a record of checks on the correspondence people actually send. Evidence of monitoring after the fact, with the issues found and what changed as a result, which is the second half of PRIN 2A.5.10R. And a population view: which teams, which product lines, which months, so that when a pattern emerges the firm can say how far it extends and when it stopped.

Firms that hold those four things answer a consumer understanding review with documents. Firms that hold a template library and a training record answer it with assertions, then negotiate a redress population.

Takeaway

Apply your communications standard to the reply, not only the campaign. Take the five sentences in the table above, put them in front of the teams who write to customers in difficulty, and ask each team to produce the version they would actually send. The gap between those two versions is your exposure, and it is measurable before a regulator measures it for you.