Consumer Duty: moving from policy to practice
The Consumer Duty came into force for open products and services on 31 July 2023, with closed book products following on 31 July 2024. The FCA's published supervisory findings make clear that, while most firms have invested significantly in frameworks and documentation, the substantive shift in culture and decision-making that the Duty requires has been uneven. FCA Chief Executive Nikhil Rathi has indicated that the regulator will move from bedding-in mode to active enforcement where it finds evidence of consumer harm that should have been identified and remediated under firms' own monitoring.
The Duty operates at three levels: the overarching principle (PRIN 2A) requiring firms to act to deliver good outcomes for retail customers; four outcome-specific rules covering products and services, price and value, consumer understanding, and consumer support; and cross-cutting rules on acting in good faith, avoiding foreseeable harm, and enabling consumers to pursue their financial objectives. Each layer has specific evidential expectations. For products and services (PROD 4), firms must demonstrate that their target market assessment is based on sound analysis, that distribution strategies align with that assessment, and that they monitor outcomes at each stage of the distribution chain.
Price and value remains an area of sustained FCA focus. Firms must be able to show that their pricing model delivers fair value — not merely that prices are disclosed or that they fall within a disclosed range. The FCA has made clear that fair value cannot be assumed from the existence of competitive markets, and that firms serving less engaged or vulnerable customers bear a higher burden of demonstrating value delivery. The requirement to share relevant information with other firms in the distribution chain is also frequently overlooked: manufacturers must provide distributors with adequate information about target market and value assessment, and both must act on that information.
Consumer understanding obligations go beyond simplifying documentation. Firms must evidence that their communications — including digital journeys, point-of-sale prompts, and post-sale notifications — are designed and tested to support informed decision-making. The FCA expects firms to use data from customer testing, complaints, and operational metrics to improve communications iteratively. Consumer support under COBS 2.1 and the cross-cutting rules requires that customers can access the level of support they need, when they need it, without unreasonable friction. This includes reviewing IVR and digital channel design against consumer outcome metrics rather than cost-reduction targets alone.
Embedding the Duty into governance
Firms should ensure that board and ExCo-level Consumer Duty reporting captures outcome data rather than activity metrics. Annual board reports must be completed and must specifically address whether the firm is delivering the four outcomes. Where monitoring reveals poor outcomes, firms must be able to demonstrate that they identified the issue, assessed root cause, and implemented a proportionate remedy — and that this process was documented and reviewed at an appropriate governance level.