FCA Consumer Duty: Higher Standards, Fewer Excuses

Another day, another regulatory upheaval.
This time, it’s the turn of the FCA’s latest brainchild.

Consumer Duty isn’t just another polite request to firms to be nicer to their customers. It’s a full-blown cultural intervention – the financial services equivalent of being told to mind your manners properly, not just mutter sorry when you get caught.

Since 31 July 2023, firms have been expected to deliver “good outcomes” for customers across all open products (those still being sold or renewed). From 31 July 2024, the same standard applied to closed products too – those dusty offerings no longer on the market but still lingering in the background.

If you manufacture, distribute, or service financial products and have even half a finger in the customer experience pie, you’re on the hook. And no, burying it in the small print won’t save you this time.

What’s in the Duty (Other than Trouble)

The Duty rests on three big expectations – all designed to stop firms from treating customers like an afterthought:

1. The Consumer Principle (Principle 12)

Act to deliver good outcomes for retail customers.
Translation: it’s no longer enough to avoid wrongdoing. You need to actively do the right thing – and be able to prove it.

2. Cross-Cutting Rules

Firms must:

• Act in good faith (don’t be sneaky).
• Avoid foreseeable harm (because saying “we didn’t see it coming” won’t wash).
• Support customers to achieve their financial objectives, not just sell them whatever’s easiest.

3. The Four Outcomes

Customer outcomes must be properly delivered across:

• Products and Services: Fit for purpose, not just whatever’s on the shelf.
• Price and Value: Costs must make sense – not priced like bottled water at a music festival.
• Consumer Understanding: Communications should be clear, fair, and genuinely helpful – not riddled with baffling legalese.
• Consumer Support: Firms must offer support that’s accessible, responsive, and genuinely useful – not a helpline that takes 14 button presses to reach a human.

Who Needs to Care: (Guess What? Probably You)

If you’re FCA authorised and influence customer outcomes in any way, you’re in scope.
Manufacturers, distributors, service providers – no one’s slipping through the cracks.

Big, small, mainstream or niche – the FCA expects you to play by the Consumer Duty rulebook.

Governance: It’s Not Just for the AGM Anymore

The FCA expects firms to hardwire Consumer Duty into their governance – not tack it on as a compliance afterthought.

• Board Responsibility: Your board must approve an annual Consumer Duty compliance report. A proper one, with actual evidence – not just “we promise it’s fine”.
• Senior Manager Accountability: No more hiding in small email groups. Specific people must own specific duties.
• Training and Incentives: Staff must be trained (and paid) to prioritise customer outcomes, not just hit targets and shift stock.

Monitoring and Reporting: Keep the Receipts

Ongoing monitoring isn’t optional – it’s the new normal.

Firms must:

• Continuously monitor outcomes across products, services, communications, and support against what customers are actually experiencing.
• Identify and address problems fast and fix them before customers (or worse, the FCA) point them out.
• Evidence their processes and improvements clearly enough to satisfy the FCA (who have little time for vague assurances).
• Review communications to ensure they are truly understandable, not just legally compliant.

And yes – it all needs to be properly documented and ready to present when the FCA inevitably comes knocking.

Fair Value: Not Just What the Market Will Bear

Charging what you think you can get away with is now officially frowned upon.

• Customers must get reasonable value for the price they pay.
• You must think about total costs, including hidden fees and future charges.
• Products mustn’t exploit consumer biases or baffle people into paying more than they should.

So, if your business model relies on customers forgetting to cancel after the free trial… it’s probably time for a rethink.

Consumer Understanding and Support: More Than Just Fine Print

Firms are expected to do more than just chuck a disclosure document at customers and hope for the best.

They must:

• Help customers make effective, informed decisions through clear, useful communications.
• Offer easy access to support – no loyalty tax, no sneaky exit fees.
• Take special care of vulnerable customers and ensure they receive outcomes just as good as everyone else.

Key Actions for Firms

The FCA has made it very clear: you should already be well on the way. If not, consider this your last polite nudge.

Here’s what you need to do:

1. Gap Analysis: Review your products, services, communications, governance, and support against the Duty’s standards.
2. Governance Enhancements: Embed customer outcome oversight into your board agenda properly – not just under “any other business”.
3. Product and Pricing Reviews: Check value for money across your offering.
4. Communication Upgrades: Test whether your customer communications are genuinely helping decisions – not just covering the firm legally.
5. Build Monitoring Systems: Check outcomes continuously, not just when you remember.
6. Board Reporting Preparation: Have something impressive (and true) to show at your next Consumer Duty review.

The Last Word

The Consumer Duty marks a serious cultural shift: firms are now judged not just by what they sell, but by how customers experience it – in real life, not just on paper.

If you’re hoping for regulatory leniency because “we tried really hard” – good luck.

This isn’t about trying. It’s about showing – with evidence, outcomes, and a business that puts the customer front and centre (on purpose, not by accident).

Firms in financial markets should get on with embedding the Duty – not just to dodge a regulatory frown, but to build businesses that are stronger, sharper, and yes, a lot harder to tell off.