PIMFA
CONSUMER DUTY
The Consumer Duty is intended to ensure a higher standard of care across financial services for retail customers and to deliver good consumer outcomes throughout the life cycle of products and services.
The Consumer Duty is a significant regulatory change with a need for a shift in culture and mindset to focus on delivering good outcomes for retail customers. The Consumer Duty is subjective and requires a holistic approach: firms need to consider the application of the duty in line with their size, type and role within the distribution chain.
- Background and aim
The Consumer Duty aligns with the Financial Conduct Authority’s (FCA) business priorities focused on consumer outcomes and reducing and preventing serious harm. The FCA is increasingly focused on addressing consumer harms, particularly given the rise in customer vulnerability (as shown by responses to the FCA’s Financial Lives Surveys). The Consumer Duty intends to create a higher level of consumer protection in retail financial services, with the FCA highlighting their data-led and outcomes-based approach to supervision.
- ELEMENTS OF THE CONSUMER DUTY
- Consumer Principle 12 states that a firm must act to deliver good outcomes for retail customers.
- Cross-cutting rules state that firms must:
- Act in good faith toward retail customers
- Avoid causing foreseeable harm to retail customers
- Enable and support retail customers to pursue their financial objectives
- Products and services
- Price and value
- Consumer understanding
- Consumer support
latest news
FCA on how Consumer Duty is supporting work on growth
In a regulatory update, Sarah Pritchard, FCA, Deputy Chief Executive, sets out the importance of Consumer Duty:
- Consumer Duty (CD) underpins all of the FCA’s consumer work. It is focused on outcomes, supports innovation, and is designed to be future-proof.
Reliance on CD has allowed the FCA to:
- Prevent the need for new rules (e.g. for AI)
- Remove existing rules and guidance
The FCA aim to reduce complexity and boost growth with CD the bedrock for delivering future efficiencies and note the recently published action plan which includes targeted clarifications to the Handbook and a consultation on improvements to the client categorisation framework to support a proportionate application of CD
Financial Conduct Authority – Consumer Duty update
The Financial Conduct Authority (FCA) has published further plans to streamline rules following the introduction of Consumer Duty:
- Consumer Duty requirements review: the action plan for 2025/26 includes new commitments as part of the Consumer Duty streamlining exercise and review
The regulator also published:
- An updated plan of Consumer Duty Focus Areas setting out priorities for 2025 to 2026 such as embedding Consumer Duty and sector-specific focus areas.
- A letter to the Chancellor to address concerns about Consumer Duty’s impact on wholesale firms.
Read our summary here
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