The Consumer Duty is an FCA standard requiring firms to deliver good outcomes for retail customers. It came into force on 31 July 2023 (and 31 July 2024 for closed products), and applies to every UK advice firm. It is built on one Consumer Principle, three cross-cutting rules, and four outcomes covering products and services, price and value, consumer understanding, and consumer support. Firms must evidence, not just assert, that they are delivering these outcomes, and review them at least annually.
Key takeaways
- The Duty is outcomes-based, not tick-box. The regulator judges the results customers actually get, not just whether a process was followed.
- The Consumer Principle (Principle 12) requires firms to "act to deliver good outcomes for retail customers."
- Three cross-cutting rules underpin everything: act in good faith, avoid foreseeable harm, and enable customers to pursue their financial objectives.
- The four outcomes are the day-to-day substance of compliance.
- Firms need a board-approved annual report assessing whether they are delivering good outcomes, backed by data.
What is the Consumer Duty in one sentence?
It is a higher and more demanding standard of consumer protection that shifts the question from "did we follow the rules?" to "did the customer get a good outcome, and can we prove it?" For advice firms, that reframes suitability, charging, communications and ongoing service around demonstrable client benefit.
The Consumer Principle and cross-cutting rules
At the top sits Principle 12: a firm must act to deliver good outcomes for retail customers. Supporting it are three cross-cutting rules that shape all firm conduct:
- Act in good faith toward customers, honest, fair, and consistent with their reasonable expectations.
- Avoid causing foreseeable harm, including through action or inaction.
- Enable and support customers to pursue their financial objectives, for example, by not creating unreasonable barriers to switching, complaining, or acting on advice.
The four outcomes explained
1. Products and services. Products must be designed to meet the needs of an identified target market and distributed appropriately. For advisers, this means matching the service and any recommended products to the client's needs, and not recommending products for clients they are not designed for.
2. Price and value. Customers must receive fair value, a reasonable relationship between the price paid and the benefits received. Firms must carry out and document fair value assessments of their own ongoing advice charges, not just product costs. If a client pays an ongoing fee, the firm must be able to show the value that fee delivers.
3. Consumer understanding. Communications must equip customers to make effective, informed decisions. That means clear, timely, and tested information, suitability reports a client can actually understand, not a wall of jargon.
4. Consumer support. Support must meet customers' needs, including those of vulnerable customers, throughout the relationship. Getting hold of the firm, asking a question, or acting on advice should not be unreasonably hard.
How do firms evidence good outcomes?
This is where most firms feel the pressure. The Duty expects monitoring using data, evidence that outcomes are actually good across your client base, including for vulnerable customers, and that you act when they are not. Practical sources include:
- Client outcome data by segment (are certain groups getting worse results?).
- Fair value assessments for ongoing advice fees.
- Complaints and root-cause analysis.
- Communications testing (do clients understand key documents?).
- Vulnerable customer identification and the outcomes those clients receive.
The FCA has repeatedly published examples of good and poor practice, and continues to sharpen expectations, including on the consumer understanding outcome and on the price and value of ongoing services.
The annual board report
Firms must produce a report, approved by the board or equivalent governing body at least annually, assessing whether the firm is delivering good outcomes consistent with the Duty. A credible report is grounded in data and leads to action, it is not a narrative that everything is fine. Where the report identifies gaps, the firm is expected to fix them.
Where advice firms most commonly fall short
- Ongoing advice fees without evidenced value. Charging an ongoing fee while struggling to demonstrate the service actually delivered is a recurring theme in FCA scrutiny.
- Consumer understanding. Suitability reports and disclosures written for the file rather than the client.
- Vulnerable customers. Identifying vulnerability but not evidencing that outcomes for those clients are as good as for others.
- Data gaps. Being unable to slice outcomes by client segment to spot harm.
Frequently asked questions
When did the Consumer Duty come into force?
For open products and services, 31 July 2023. For closed products, 31 July 2024. It applies to all UK firms serving retail customers, including advice firms.
What are the four Consumer Duty outcomes?
Products and services, price and value, consumer understanding, and consumer support.
Does the Consumer Duty require a board report?
Yes. Firms must produce a board-approved assessment of whether they are delivering good outcomes at least once a year.
Do I need a fair value assessment for my advice fees?
In practice, yes. The price and value outcome expects firms to assess whether the total price a client pays, including ongoing advice charges, represents fair value for the benefits received.
How does the Consumer Duty relate to targeted support?
The Consumer Duty underpins the new targeted support regime. Any firm providing targeted support must continue to comply with the Duty and monitor consumer outcomes.