Complete Consumer Duty Implementation Guide

The Consumer Duty is a new consumer protection regime introduced by the Financial Conduct Authority (FCA) that sets higher and clearer standards of consumer protection across financial services. It came into force on 31 July 2023 for new and existing open products and services, and on 31 July 2024 for closed products and services.

The Duty represents a fundamental shift in how the FCA expects firms to treat retail customers. It moves beyond a narrow focus on disclosure and prescriptive rules to a broader outcomes-based approach that requires firms to enable and support good outcomes for retail customers.

The Consumer Duty is not just another regulatory requirement to tick off. It represents the most significant change to consumer protection regulation in the UK in decades. The FCA has made clear that compliance with the Duty is a supervisory priority and firms that fail to meet the required standards will face enforcement action.

The Consumer Duty is built around four key outcomes that firms must deliver for their retail customers. Each outcome has specific requirements and expectations that firms must meet.

Products and services must be designed to meet the needs, characteristics, and objectives of customers in an identified target market and must be distributed appropriately.

The price of a product or service must represent fair value for customers. This is one of the most challenging aspects of the Duty as it requires firms to assess the relationship between price and value, not just price alone.

Communications must support customers to make informed decisions about financial products and services. This goes beyond simple disclosure to ensuring customers genuinely understand key information at the right time.

Firms must provide customer support that meets customers' needs throughout the customer relationship. This includes both pre-sale and post-sale support.

In addition to the four outcomes, the Consumer Duty includes three cross-cutting rules that apply to all aspects of a firm's relationship with retail customers.

Firms must act in good faith towards retail customers. This means firms must act honestly and fairly, with appropriate regard for the interests of their customers.

Firms must avoid causing foreseeable harm to retail customers. This requires firms to think ahead about what could go wrong and take action to prevent it.

Firms must enable and support retail customers to pursue their financial objectives. This means removing obstacles and providing appropriate support.

Conducting a comprehensive gap analysis is the critical first step in Consumer Duty implementation. This identifies where your firm currently stands against the Duty's requirements and where remediation is needed.

A thorough gap analysis should cover all aspects of your business that impact retail customers. The FCA expects firms to have completed gap analyses and implemented necessary changes.

Not all gaps are equal. Firms should prioritize remediation based on the risk of customer harm and the scale of impact.

Implementing the Consumer Duty requires changes across governance, operations, systems, and culture. This section covers the key implementation requirements firms must address.

Effective governance is essential for Consumer Duty compliance. The FCA expects boards and senior management to take ownership of implementation and ongoing compliance.

Firms need comprehensive policies and procedures to operationalize the Duty's requirements across the business.

Good quality MI is fundamental to demonstrating compliance with the Consumer Duty. Firms must monitor whether they are delivering good outcomes and take action when they identify issues.

Under the Consumer Duty, firms must prepare an annual report for the board (or equivalent governing body) setting out the results of monitoring and any actions required. The FCA published good practice guidance based on its review of the first annual reports.

The Consumer Duty rules require the board report to include:

The FCA reviewed 180 first annual board reports and published good practice examples. The best reports demonstrated:

The FCA also identified common areas for improvement:

Supporting vulnerable customers is a key aspect of the Consumer Duty. Firms must ensure that customers with characteristics of vulnerability receive outcomes as good as those for other customers.

The FCA defines a vulnerable customer as someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.

Once vulnerability is identified, firms must provide appropriate support tailored to the customer's needs.

Firms must monitor whether vulnerable customers are receiving outcomes as good as those for other customers.

Strong product governance is essential for meeting the Products and Services outcome. Firms must ensure products are designed to meet the needs of a clearly defined target market and distributed appropriately.

The starting point for product governance is clearly defining the target market for each product or service.

Products must be distributed through appropriate channels that will reach the intended target market.

Products must be reviewed regularly to ensure they continue to meet the needs of the target market and deliver good outcomes.

Understanding common pitfalls and FCA expectations helps firms avoid mistakes and focus efforts on areas that matter most for compliance.

When issues are identified, firms need clear strategies for remediation:

The Consumer Duty is not a one-off implementation project. It requires ongoing compliance, continuous monitoring, and genuine embedding in firm culture.

Firms must continuously monitor customer outcomes and take action when issues are identified.

The FCA has made clear that delivering good outcomes under the Duty requires a genuine culture change in many firms, not just new policies and procedures.

The board must assess whether the firm's future business strategy is consistent with delivering good outcomes under the Duty.

The Consumer Duty represents a fundamental shift in how the FCA expects firms to treat retail customers. It moves beyond prescriptive rules to an outcomes-based approach that requires firms to demonstrate they are delivering good outcomes across four key areas: products and services, price and value, consumer understanding, and consumer support.

Successful implementation requires more than just new policies and procedures. It demands genuine culture change, robust evidence through data and MI, active board engagement, and ongoing monitoring and action when issues are identified.

The FCA has made clear that Consumer Duty is a supervisory priority. Firms that fail to meet the required standards will face regulatory action. But firms that genuinely embed the Duty can benefit from stronger customer relationships, reduced complaints and ombudsman cases, and competitive differentiation.

This guide has covered the key elements of Consumer Duty implementation, but every firm's journey will be different depending on their business model, products, and customers. The key is to start with a thorough gap analysis, develop a comprehensive implementation plan, take action to address issues, and continuously monitor outcomes.