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
This report is free for our members and is available to purchase for non members.
latest news
FCA Wider Implications Framework Annual Report 2025/26
The FCA has published the Wider Implications Framework Annual Report for 2025-26 and notes key areas of collaboration:
- Advice Guidance Boundary Review
- Consumer Duty
- APP Fraud
- Pensions Value for Money Framework
- Motor Finance Commission Redress
Updated Terms of Reference have also been published.
Read the full report here
Financial Conduct Authority – Review into firms’ approaches to products and services (findings)
The Financial Conduct Authority (FCA) has published findings following a review of how firms are designing products and services to better meet customer needs under Consumer Duty.
The report:
- Highlights positive steps firms have taken to improve how they design, monitor and distribute products and services to deliver good outcomes
- Extra insight and examples for smaller firms to help them apply Consumer Duty in a proportionate and practical way
Noting the importance of inclusive design, the FCA advises that it is not typically limited to customers in vulnerable circumstances – it should be focused on improving outcomes for all customer groups.
Good practice examples highlighted by the regulator include:
- Mapping customer needs to product or service design
- Testing of target market compatibility
- Adapting products or services and customer journeys for different customer segments
- Outcome-focused, customer-centric management information for monitoring and review
- Making changes in response to issues identified through ongoing monitoring of products and services
- Tailoring distribution strategy to profile of target market
- Structured engagement with distributors
- Intervening on out-of-target market distribution
Areas for improvement are also set out in the report:
- Granularity of target markets
- Focus on identifying customers in vulnerable circumstances
- Limitations in monitoring
- Validating the impact of product or service changes
- Limited evidence to justify choice of distribution strategy
- Measuring impact of changes to distribution strategy
The FCA also advise of further updates to existing good practice reviews on consumer support, complaints and root cause analysis and the price and value outcome.
Members can access the products and services review findings here.
