Consumer Duty
Also called principle 12, PRIN 2A
The Consumer Duty is a UK Financial Conduct Authority rule that requires regulated firms to act to deliver good outcomes for retail customers. It sits in Principle 12 and PRIN 2A of the FCA Handbook and applies across the distribution chain, covering products and services, price and value, consumer understanding and consumer support.
How it works
Firms map every retail product to the four outcomes and gather data showing customers get fair value, understand communications and can get support as easily as they can buy. Three cross-cutting rules require firms to act in good faith, avoid foreseeable harm and enable customers to pursue their financial objectives. Boards approve an annual report assessing whether the firm delivers good outcomes.
The Duty shifted FCA supervision from checking processes to testing outcomes. Firms must monitor results by customer group, including customers with characteristics of vulnerability, and act when outcomes differ. The FCA has used the Duty in reviews of savings rates, fair value and treatment of customers in financial difficulty. It applied to open products from 31 July 2023 and closed products from 31 July 2024.
The rules
Introduced Principle 12, cross-cutting rules and four outcomes requiring firms to deliver good outcomes for retail customers.
FCA-regulated firms serving retail customersBrought the Consumer Duty into force for products and services open to sale or renewal.
Firms with new and existing products open to sale or renewalExtended the Consumer Duty to closed products and services that are no longer on sale or open to renewal.
Firms with closed products and servicesCommon questions
What are the four Consumer Duty outcomes?
The four outcomes cover products and services, price and value, consumer understanding, and consumer support. Firms must show that each retail product meets customer needs, offers fair value, is explained clearly and comes with support that does not create unreasonable barriers.
Does the Consumer Duty apply to wholesale firms?
It applies to firms that can determine or materially influence retail customer outcomes, including manufacturers and distributors in the chain. Firms with no role in retail outcomes are outside its scope, though the FCA Principles still apply to them.
What does the board have to do under the Consumer Duty?
The board or equivalent governing body must review and approve an assessment, at least annually, of whether the firm is delivering good outcomes for retail customers and set out any action needed where it is not.
