From Implementation to Accountability
Consumer Duty is no longer new. It is no longer forthcoming. It is embedded, operative, and — as of 2026 — the subject of active FCA supervision with enforcement consequences for firms that have treated it as a paper exercise. The FCA’s posture has shifted decisively from the hand-holding of the implementation period to the rigorous scrutiny of a mature regulatory obligation.
Firms that produced glossy implementation plans in 2023 and then allowed the Duty to gather dust in a policy folder are now squarely in the FCA’s supervisory crosshairs. The question regulators are asking is not “have you implemented Consumer Duty?” but rather “can you demonstrate — with evidence — that your firm is delivering good outcomes for retail customers, consistently, measurably, and across your entire distribution chain?”
What Is Consumer Duty and Where Does It Live?
Consumer Duty is the FCA’s overarching framework for embedding consumer-centric conduct across the full lifecycle of financial products and services. It came into force for open-book products and services on 31 July 2023 and extended to closed-book products on 31 July 2024. It is codified in PRIN 2A of the FCA Handbook.
Consumer Duty sits above and informs all other FCA conduct rules. It does not merely supplement existing obligations — it reframes them. Every policy, process, and commercial decision must be evaluated through the lens of whether it delivers, or impedes, good outcomes for retail customers. Where existing sectorspecific rules produce better consumer outcomes, those rules apply. Where Consumer Duty produces a higher standard, the Duty prevails.
The Consumer Principle: The Overarching Standard
At the apex of the Consumer Duty framework sits Principle 12: “A firm must act to deliver good outcomes for retail customers.” This is not a best-endeavours obligation. It is an affirmative, proactive standard that requires firms to pursue good outcomes — not merely avoid bad ones.
The distinction is material. Under the previous Treating Customers Fairly (TCF) framework, firms could point to process compliance as evidence of fair treatment. Under Consumer Duty, process alone is insufficient. A firm must be able to demonstrate, with empirical evidence, that good outcomes are actually being delivered to actual customers — including those who are vulnerable, less financially sophisticated, or from disadvantaged groups.
The Three Cross-Cutting Rules Explained
Underpinning the four outcomes are three cross-cutting rules that govern how firms must behave across all aspects of their conduct with retail customers. These rules are not outcome-specific; they permeate every customer interaction, product decision, and communication.
The three cross-cutting rules are:
- Act in good faith towards retail customers — behaving honestly, fairly, and without pursuing hidden agendas that conflict with customers’ interests
- Avoid causing foreseeable harm — proactively identifying and mitigating risks of harm before they materialise, not merely reacting after damage is done
- Enable and support customers to pursue their financial objectives — ensuring products, services, and communications genuinely empower customers to make informed decisions aligned with their needs
These rules require firms to adopt a prospective mindset, anticipating how their actions will affect customers rather than defending historical decisions after complaints arise. The FCA has been explicit: firms that treat the cross-cutting rules as abstract principles, without operationalising them into tangible policies and behaviours, are not meeting the standard the Duty demands.
Outcome 1 — Products and Services: Governance and Target Market
The first outcome requires firms to ensure that their products and services are designed to meet the needs of an identifiable target market, and that governance arrangements exist to support this throughout the full product lifecycle — from design through to withdrawal.
Key compliance requirements under this outcome include:
- Defining a target market for each product or service with sufficient granularity to inform design, distribution, and marketing decisions
- Conducting a product approval process before launch, with documented assessment of whether the product meets target market needs
- Implementing ongoing product reviews — at minimum annually — to assess whether the product continues to deliver the intended outcomes
- Identifying products that may be reaching customers outside the intended target market and taking corrective action
- Ensuring that features designed to benefit customers are not undermined by charges, restrictions, or operational barriers
For firms in a distribution chain, manufacturers must share sufficient information with distributors to enable them to distribute products appropriately. The governance accountability sits with both parties — a manufacturer cannot fully discharge its obligations by issuing a generic target market statement and assuming the distributor will do the rest.
Outcome 2 — Price and Value: Fair Value Assessment
The price and value outcome demands that firms ensure there is a reasonable, evidenced relationship between the price charged and the benefit a retail customer receives. This is an active, ongoing assessment obligation — not a one-time pricing review.
Firms must:
- Conduct a fair value assessment for each product or service and document it thoroughly
- Identify whether any group of customers is receiving materially worse value than others and address the disparity
- Assess whether add-on products, ancillary charges, and cross-subsidisation arrangements distort the overall value proposition
- Review value assessments whenever there is a material change to the product, pricing structure, or target market
- Ensure that value is assessed from the customer’s perspective, not merely from the firm’s commercial standpoint
The FCA has signalled that it will conduct spot-checks on value assessments and that it is particularly focused on products where profitability is disproportionately high relative to demonstrable customer benefit. Firms that cannot produce a documented, evidenced fair value assessment for every product in their range are not in compliance with this outcome — irrespective of how competitive their pricing appears in the market.
Outcome 3 — Consumer Understanding: Communications and Financial Promotions
Consumer understanding requires that firms’ communications — including financial promotions, product disclosure documents, and customer correspondence — equip retail customers to make informed decisions consistent with their own financial interests.
This outcome extends far beyond the FCA’s existing financial promotions regime. It demands a holistic assessment of whether communications, taken as a whole, genuinely support customer understanding. Key obligations include:
- Ensuring communications are clear, fair, and not misleading — a standard that has existed for decades but which Consumer Duty now applies with heightened evidential expectations
- Testing communications with target audience representatives, particularly where products are complex or carry material risks
- Using plain language and accessible formats, avoiding jargon that may obscure material information
- Ensuring that the timing of communications is appropriate — providing information when it is most useful to the customer, not merely when it is most convenient for the firm
- Reviewing financial promotions not merely for technical accuracy but for their overall impression on a reasonable member of the target market
Where evidence — such as complaint patterns, customer feedback, or FOS decisions — suggests that customers routinely misunderstand a product or its costs, the firm’s communications must be reviewed and remediated. Consumer understanding is measured by outcomes, not intentions.
Outcome 4 — Consumer Support: Accessible, Effective Assistance
The consumer support outcome requires firms to provide a level of support that meets the needs of retail customers throughout the duration of the relationship, including at the point of sale, during product tenure, and at exit.
Specific requirements under this outcome include:
- Support services must be accessible to all customers, including those with characteristics of vulnerability, limited digital literacy, or communication barriers
- Customers must not face unreasonable barriers when they wish to switch, transfer, complain, access a benefit, or cancel a product
- Response times and resolution quality must be sufficient to avoid consumer detriment arising from support failures
- Firms must monitor support outcomes — including first-contact resolution rates, average handling times, and complaint root causes — as part of their broader Consumer Duty MI framework
- Post-sale support must be as robust as pre-sale engagement; the FCA has identified a consistent tendency for firms to invest disproportionately in the sales journey whilst underinvesting in ongoing support
The prohibition on unreasonable barriers is particularly sharp. Exit barriers, onerous cancellation processes, and automated phone systems designed to frustrate rather than assist are squarely within the FCA’s supervisory focus under this outcome.
Vulnerability: The Embedded Obligation Across All Four Outcomes
Consumer vulnerability is not a standalone compliance item — it is an obligation woven through every dimension of Consumer Duty. The FCA expects firms to understand the nature and scale of vulnerability within their customer base and to ensure that every outcome is delivered equitably to vulnerable customers as well as those in more stable circumstances.
Firms must:
- Define vulnerability in a manner appropriate to their customer base, drawing on the FCA’s Guidance on the Fair Treatment of Vulnerable Customers (FG21/1)
- Train all customer-facing staff to recognise and respond appropriately to indicators of vulnerability
- Design products, communications, and support channels with vulnerable customers’ needs explicitly considered
- Monitor whether vulnerable customers are receiving outcomes equivalent to the wider customer population, and take remedial action where they are not
- Document vulnerability-related decisions and outcomes as part of the firm’s Consumer Duty evidence base
The FCA has stated unequivocally that firms which cannot demonstrate differentiated consideration for vulnerable customers are not meeting the Consumer Duty standard, regardless of their broader compliance posture.
The Consumer Duty Board Report: What Must Be in It?
Under PRIN 2A.9, every firm subject to Consumer Duty must produce an annual board report assessing the outcomes being delivered to retail customers and identifying any necessary remedial actions. The report must be reviewed and approved by the governing body — not merely circulated for information.
The next Consumer Duty Board Report is due by 31 July 2026.
A compliant board report must include:
- An assessment of whether the firm’s products and services are delivering the outcomes intended under each of the four Consumer Duty outcomes
- Evidence of the monitoring data and MI used to reach the assessments, including any limitations in the data
- Identification of any groups of customers receiving worse outcomes, with root cause analysis and remediation plans
- An evaluation of the impact of actions taken in response to the previous year’s report recommendations
- Forward-looking action plans with clear ownership, timelines, and success metrics
- Evidence of how the board has engaged with and challenged the findings — not merely ratified them
The FCA was explicit following its 2024 review of first-year board reports: a report that recites good intentions without evidencing outcomes is not satisfactory.
Good Practice vs. Poor Practice: The FCA’s 2024 Findings
Following its review of firms’ first annual Consumer Duty board reports in 2024, the FCA published detailed findings setting out what distinguished exemplary compliance from inadequate tick-box submissions.
Good practice included:
- Comprehensive MI frameworks drawing on multiple data sources — complaints, NPS scores, FOS data, product performance metrics, and customer research
- Board reports that identified genuine areas of weakness and set out credible, time-bound remediation plans
- Firms that evidenced actual board challenge and discussion of the report’s contents, not merely sign-off
- Proactive identification of customer cohorts receiving worse outcomes, with root cause analysis
Poor practice included:
- Reports that described implementation activity rather than evidencing outcomes
- Reliance on a single data source (typically complaints data) as a proxy for overall outcome quality
- Generic action plans without ownership or timelines
- Board reports that were produced by compliance teams and ratified without substantive board engagement
- Absence of any analysis of whether vulnerable customers received equivalent outcomes
The FCA has indicated that subsequent supervisory activity will specifically assess whether firms have addressed the weaknesses identified in the 2024 review.
What the FCA Expects from Smaller Firms in 2026
The FCA updated its Consumer Duty board report guidance in February 2026 with specific additional direction for smaller firms, acknowledging that the MI infrastructure available to boutique operators differs materially from that of large institutions.
Smaller firms are not exempt from the board report obligation. However, the FCA has signalled proportionality in how it will be applied:
- Smaller firms should supplement limited internal data with external sources — FOS data, trade body research, and market-wide complaints intelligence
- Qualitative evidence — including frontline staff observations, customer interviews, and complaint call recordings — is explicitly recognised as a legitimate component of outcomes monitoring
- Where firms lack formal board committees, clear documentation of who holds accountability for Consumer Duty and how decisions are escalated is essential
- Governance records must demonstrate that Consumer Duty is a standing agenda item at the most senior decision-making level, not an annual compliance report dropped into an inbox
The FCA’s acknowledgement of proportionality does not diminish the underlying obligation. A smaller firm that cannot evidence good outcomes — through any means proportionate to its scale — is not meeting the Duty.
Management Information: Building Your Outcomes Evidence Base
Management Information is the empirical substrate upon which all Consumer Duty compliance rests. Without robust, outcome-focused MI, firms cannot assess whether the Duty is being met, identify where it is failing, or provide the FCA with the evidence it demands during supervisory engagement.
An effective Consumer Duty MI framework should draw from:
- Complaints data — volume, root cause categorisation, upheld rates, repeat complaints, and time to resolution
- Product performance data — utilisation rates, lapse rates, exit rates, and benefit claim rates where applicable
- Customer research — surveys, satisfaction scores, outcome testing, and qualitative feedback
- Financial Ombudsman Service data — ombudsman decisions, uphold rates relative to sector benchmarks, and emerging complaint themes
- Operational metrics — abandoned call rates, digital journey completion rates, and escalation frequencies
- Vulnerability indicators — identification rates, support adaptations made, and outcome differentials between vulnerable and non-vulnerable cohorts
MI must be reviewed at a frequency commensurate with the firm’s risk profile — for high-volume consumer-facing businesses, monthly MI review is a minimum. The MI framework should be formally documented, with clear ownership at senior management level.
Distribution Chains: Manufacturer and Distributor Responsibilities
One of the most practically complex dimensions of Consumer Duty is its application across distribution chains, where manufacturers and distributors share, but do not equally bear, responsibility for consumer outcomes.
The FCA’s framework allocates responsibilities as follows:
- Manufacturers — firms that create, issue, or materially design products — must set target market definitions, conduct fair value assessments, and share sufficient information with distributors to enable compliant distribution
- Distributors — firms that sell, advise on, or arrange products designed by others — must ensure they distribute only to customers within the target market and must not act in ways that undermine the manufacturer’s fair value assessment
- Where a firm is both manufacturer and distributor of its own products, it bears the full weight of both roles concurrently
In the first half of 2026, the FCA intends to consult on clarifying how the Duty applies across distribution chains — including co-manufacturing arrangements in insurance and the scope of “reliance arrangements” between distributors and manufacturers. Firms operating in distribution chains should not wait for that consultation before addressing gaps in their chain governance.
FCA Supervisory Focus Areas for 2025–2026
The FCA published its Consumer Duty supervisory focus areas in September 2025, setting out the specific themes its supervisory programme will pursue through 2026. These are not aspirational priorities — they are signposts for where enforcement risk is concentrated.
The FCA’s key supervisory focus areas for Consumer Duty in 2025–26 include:
- Outcomes monitoring — whether firms have genuine, data-driven evidence of the outcomes being delivered to customers
- Product and service design — whether target market definitions are sufficiently granular and whether products continue to meet target market needs over time
- Fair value — whether price and value assessments are evidenced, reviewed regularly, and address inter-customer disparities
- Customer journey design — whether journeys are designed to facilitate informed decisions or to nudge customers towards commercially convenient outcomes
- Consumer support quality — whether support is genuinely accessible and effective, particularly for vulnerable customers
- Distribution chain governance — whether manufacturers and distributors are sharing appropriate information and coordinating effectively
Thematic reviews — potentially including sector-specific deep dives — are anticipated across several of these areas during 2026.
Consumer Duty and SM\&CR: Personal Accountability for Outcomes
Consumer Duty does not exist in isolation from the Senior Managers and Certification Regime. The two frameworks intersect directly: under SM\&CR, each Consumer Duty obligation must be allocated to a named Senior Manager who is personally accountable for its discharge.
Practically, this means:
- The firm’s Statements of Responsibilities (SoRs) must clearly identify which Senior Manager holds accountability for Consumer Duty oversight
- The Responsibilities Map (for larger firms) must reflect Consumer Duty governance structures and escalation pathways
- Senior Managers cannot claim ignorance of Consumer Duty failures that fall within their allocated responsibility
- Where a Consumer Duty failure also constitutes a conduct rule breach by a Senior Manager, both SM\&CR and Consumer Duty enforcement consequences may follow simultaneously
This dual accountability framework means that Consumer Duty non-compliance can, in sufficiently serious cases, result in individual regulatory action against named executives — not merely firm-level findings.
Closed Book Products: Ongoing Obligations That Cannot Be Ignored
Consumer Duty’s extension to closed book products on 31 July 2024 brought the full weight of the Duty’s obligations to bear on legacy products no longer available for new business. This remains one of the least well-implemented dimensions of Consumer Duty across the industry.
Firms with closed book products must:
- Apply the price and value outcome — assessing whether customers holding legacy products are receiving fair value relative to current market offerings
- Ensure consumer support for closed book customers is not materially inferior to that provided to active-book customers
- Monitor outcomes for closed book customers with the same rigour applied to new book products, including vulnerability considerations
- Consider whether any legacy product features — high exit charges, opaque structures, or outdated terms — are causing foreseeable harm and take appropriate remedial action
The FCA has made clear that firms cannot grandfather their way out of Consumer Duty obligations for historical products simply because those products are no longer sold.
Changes Expected to Consumer Duty in 2026
Consumer Duty is not static. In the first half of 2026, the FCA is expected to consult on several significant changes to the Duty’s scope and application:
- Removal of non-UK customers from scope — a response to industry concerns about regulatory duplication and competitive disadvantage in cross-border activities
- Clarification of the Duty’s application across distribution chains, including specific proposals for co-manufacturing arrangements in the insurance sector
- Consultation on updating the client categorisation framework to ensure sophisticated investors are not subject to unnecessary retail protections
- Clearer delineation of business-to-business activity that genuinely falls outside the Duty’s scope, addressing persistent industry uncertainty about its wholesale application
- Coordination with the Financial Ombudsman Service to improve consistency between the FOS’s adjudication standards and the FCA’s supervisory expectations under Consumer Duty
Firms should monitor these consultations closely. Changes to scope may affect compliance obligations and distribution chain arrangements. However, no change is anticipated to the core framework, and the fundamental obligation to deliver good outcomes for retail customers will remain undiminished.
Common Compliance Failures and How to Remediate Them
The FCA’s supervisory activity and published findings consistently surface a recurring set of Consumer Duty compliance failures. Recognising them — and addressing them proactively — is far preferable to encountering them during a supervisory visit:
- Outcome monitoring as a compliance formality — MI reviewed annually as a board report input, rather than monitored continuously as an operational tool. Remediation: establish monthly MI review cadence with defined escalation triggers.
- Target market definitions that are too broad — generic descriptors that provide no meaningful guidance for distribution or product design. Remediation: redefine target markets with demographic, behavioural, and financial characteristic specificity.
- Fair value assessments that benchmark price without assessing benefit — demonstrating competitive pricing without evidencing what customers actually receive for the price paid. Remediation: rebuild fair value assessments to address both price and benefit dimensions with empirical evidence.
- Communications not tested with target audiences — materials drafted by compliance or legal teams without validation against customer comprehension. Remediation: introduce structured communications testing using representative customer samples or independent readability assessment.
- Vulnerability identification limited to obvious indicators — identifying only the most conspicuous vulnerabilities whilst missing more nuanced circumstances. Remediation: enhance staff training and update vulnerability identification tools to capture a broader range of circumstances.
- Board reports produced by compliance and ratified without substantive discussion — a governance failure as much as a compliance one. Remediation: institute formal board agenda time for Consumer Duty, with pre-read materials issued in advance and minutes documenting substantive challenge.
Embedding Consumer Duty Into Day-to-Day Operations
The firms achieving genuine Consumer Duty compliance in 2026 are those that have moved beyond implementation as a project and embedded the Duty into the fabric of how the business operates. This is not a philosophical aspiration — it is a practical imperative.
Embedding Consumer Duty operationally means:
- Including Consumer Duty impact assessment as a standard step in all product change, pricing, and communications approval processes
- Ensuring that commercial decisions — pricing, incentive structures, distribution strategies — are reviewed for Consumer Duty alignment before implementation
- Building Consumer Duty considerations into recruitment, induction, and training so that all staff understand the firm’s obligations and their own role in delivering them
- Establishing a Consumer Duty Champion at board level with genuine authority and engagement
- Creating feedback loops between front-line staff, compliance, and senior management so that early indicators of poor outcomes are surfaced and acted upon in real time
Consumer Duty embedded in this manner is not a regulatory burden — it is the architecture of a firm that genuinely serves its customers well.
Consumer Duty Compliance Checklist
The following checklist provides a structured reference against which firms should assess their current compliance posture:
Governance and Strategy
- [ ] Consumer Duty responsibility allocated to a named Senior Manager in Statements of Responsibilities
- [ ] Consumer Duty standing agenda item at board and ExCo level
- [ ] Consumer Duty impact assessment embedded in all product and commercial change processes
- [ ] Annual Consumer Duty Board Report completed and approved by the governing body by 31 July 2026
Products and Services (Outcome 1)
- [ ] Target market defined with sufficient granularity for each product and service
- [ ] Product approval process documented and operational
- [ ] Annual product review conducted with outcomes evidence
- [ ] Closed book products assessed for fair value and consumer support equivalence
Price and Value (Outcome 2)
- [ ] Fair value assessment completed and documented for all products
- [ ] Assessment evidences both price and benefit dimensions
- [ ] Value assessed from the customer’s perspective, not purely the firm’s
- [ ] Trigger-based review process in place for material pricing or product changes
Consumer Understanding (Outcome 3)
- [ ] All communications reviewed against Consumer Duty standard, not merely financial promotions rules
- [ ] Communications tested with representative target audience members
- [ ] Plain language standards applied and documented
- [ ] Timing and sequencing of information assessed for customer utility
Consumer Support (Outcome 4)
- [ ] Support channels accessible to customers with characteristics of vulnerability
- [ ] No unreasonable barriers to switching, cancellation, or complaint
- [ ] Support MI monitored — including call abandonment rates, resolution times, and escalation frequencies
Vulnerability
- [ ] Vulnerability policy aligned to FG21/1
- [ ] Staff training on vulnerability identification and response completed and documented
- [ ] Outcome monitoring includes vulnerability cohort differential analysis
Monitoring and MI
- [ ] MI framework documented with defined data sources, owners, and review frequency
- [ ] Multiple data sources used — not solely complaints
- [ ] Poor outcome root cause analysis process in place and operational
Distribution Chain
- [ ] Manufacturer/distributor responsibilities clearly documented
- [ ] Target market information shared with all distribution chain participants
- [ ] Fair value assessment shared with distributors where required
Frequently Asked Questions
Does Consumer Duty apply to B2B firms?
The Duty applies to firms conducting business with retail customers. Purely wholesale activities generally fall outside scope, but many firms have hybrid models. In the first half of 2026, the FCA will consult on further clarifying the B2B boundary. Until that clarity is published, firms with any retail dimension should apply the Duty conservatively.
When is the next Consumer Duty Board Report due?
The annual Consumer Duty Board Report must be completed and approved by the firm’s governing body by 31 July 2026.
Can a smaller firm use qualitative evidence in its board report?
Yes. The FCA updated its guidance in February 2026 explicitly to acknowledge that smaller firms may rely on qualitative evidence — staff observations, customer interviews, complaints calls — alongside quantitative MI, provided the evidence base is proportionate to the firm’s scale and risk profile.
What happens if the FCA identifies Consumer Duty failures during supervision?
The FCA’s supervisory response is risk-proportionate. Initial findings may result in a requirement to remediate and report back. Persistent or serious failures — particularly where consumer harm has resulted — can attract public censure, financial penalties, and, where SM\&CR obligations are engaged, individual enforcement action against named Senior Managers.
Do Consumer Duty obligations apply to products no longer sold to new customers?
Yes. The Duty’s extension to closed book products on 31 July 2024 means that all legacy products are subject to the price and value, consumer support, and ongoing monitoring obligations. The FCA does not recognise closed book status as a basis for reduced Consumer Duty rigour.
Is Consumer Duty additional to, or does it replace, Treating Customers Fairly?
Consumer Duty supersedes TCF as the primary conduct standard for retail customer business. The TCF outcomes remain in the background but the Consumer Duty standard is higher, more specific, and carries greater evidential expectations. Firms that have merely relabelled their TCF frameworks as Consumer Duty frameworks without substantive enhancement are not compliant.
Compliance Consultant has been assisting FCA-regulated firms to implement, evidence, and maintain Consumer Duty compliance since its inception. For a complimentary gap analysis of your Consumer Duty framework, visit complianceconsultant.org, call 0800 689 0190, or book a discovery session at bit.ly/CCDiscovr.
