Consumer Duty Compliance

The Consumer Duty (PRIN 2A) requires firms to deliver good outcomes for retail customers. It sets a higher standard of consumer protection by introducing a new Consumer Principle ('a firm must act to deliver good outcomes for retail customers'), cross-cutting rules requiring firms to act in good faith, avoid foreseeable harm, and enable customers to pursue their financial objectives. It represents the most significant shift in FCA conduct regulation since the Treating Customers Fairly initiative.

The Consumer Duty came into force on 31 July 2023 for new and existing products and services that are open to sale or renewal. For closed products and services (those no longer marketed or sold to new customers), the Duty applied from 31 July 2024. All FCA-regulated firms dealing with retail customers must now be fully compliant across both open and closed books.

The four outcomes are: (1) Products and services -- products must be designed to meet the needs of identified target markets; (2) Price and value -- customers must receive fair value, with a reasonable relationship between price and benefit; (3) Consumer understanding -- communications must equip customers to make effective, timely, and properly informed decisions; and (4) Consumer support -- firms must provide support that meets customers' needs throughout the product lifecycle, including making it as easy to switch or cancel as it was to buy.

Yes. PRIN 2A.9 requires firms to produce an annual assessment of how they are delivering good outcomes for customers, which must be reviewed and approved at board level (or equivalent governing body). The first reports were due by 31 July 2024. The report must include evidence of outcomes monitoring, assessment of whether the firm is meeting the Duty's requirements, and actions taken or planned to address any shortcomings identified.

The FCA expects firms to develop a robust Management Information (MI) framework that tracks outcomes across all four areas: products and services, price and value, consumer understanding, and consumer support. Effective monitoring includes regular analysis of complaints data (by root cause), customer satisfaction scores, sales outcomes, attrition rates, and the results of communications testing. MI must be reviewed at board level and should trigger remedial action where poor outcomes are identified.

Yes. Consumer Duty applies to all firms with a role in the manufacture or distribution of products to retail customers, regardless of whether they have a direct relationship with end customers. Manufacturers must share information with distributors to enable them to comply. Distributors must in turn act consistently with the Duty when selecting and distributing products. Both parties must have appropriate agreements in place, and the FCA expects firms to conduct due diligence on their distribution arrangements.

Consumer Duty replaces and significantly strengthens TCF. While TCF set outcomes for firms to demonstrate, the Duty goes further: it imposes a positive obligation to deliver good outcomes (not just avoid bad ones), introduces cross-cutting rules requiring firms to act in good faith and avoid foreseeable harm, and requires firms to enable customers to pursue their financial objectives. Consumer Duty also introduces specific outcome requirements that go beyond TCF principles, requires annual board sign-off on outcome delivery, and explicitly applies across distribution chains.