It is nearly the 3-year anniversary of the FCA’s Consumer Duty[1] coming into force, which was intended to set “higher and clearer standards of consumer protection across financial services”. This article checks in on the impact of the Consumer Duty, including how financial services firms have (or have not!) embedded it into their practices, and whether they truly are putting their customer’s needs first.

[1] https://collyerbristow.com/longer-reads/the-new-fca-consumer-duty/

The Consumer Duty is the 12^th and most recent of the FCA’s core principles, set out at Section 2.1 of its PRIN Handbook, alongside requirements such as conducting business with integrity, skill, and care, managing risks effectively, and maintaining financial prudence. It has been in effect for some time now (from 31 July 2023 for products or services open to sale and renewal, and 31 July 2024 for closed products or services).

It was a new package of measures relating to retail customers which comprised a new FCA Principle, Cross-Cutting Rules and Four Specific Outcomes. Plenty for those within the financial services sector to get their heads around.

Cross Cutting Rules

These are rules embedded in PRIN 2A which represent the foundational standards of behaviour that must “cut across” and be applied to every aspect of a business providing services to retail clients and apply at all stages of the customer journey and during the “whole lifecycle of a product”.

In the FCA framework, these three rules are:

1. Act in good faith: Behave honestly, fairly, and openly with customers.
2. Avoid foreseeable harm: Take proactive steps to prevent situations where customers could lose out or be exploited.
3. Enable and support customers: Empower consumers to make informed choices and achieve their financial goals

The cross-cutting obligations define how firms should act to deliver good outcomes for retail customers

Manufacturers – product approval process

One of the key tenets of the Consumer Duty is that it applies to the manufacturer of a product even where that manufacturer sells the product onto another person, i.e. a private bank / IFA which on-sells to the underlying retail customer.

Prior to the introduction of the Consumer Duty, a manufacturer could switch off as soon as it had sold its product onto another “retail facing” institution which would sell the product to its own customers, in the knowledge that the retail facing institution would undertake its own suitability and appropriateness tests. Whilst the Consumer Duty does not require the manufacturer to know every customer, the rules in PRIN 2A now require the manufacturer to keep in mind the nature of the customer

More specifically PRIN 2A contains detailed instructions to manufacturers for their product approval procedures:

• specify the target market for the product at a sufficiently granular level, taking into account the characteristics, risk profile, complexity and nature of the product;
• take account of any particular additional or different needs, characteristics and objectives that might be relevant for retail customers in the target market with characteristics of vulnerability;
• ensure that all relevant risks to the target market, including any relevant risks to retail customers with characteristics of vulnerability, are assessed;
• ensure that the design of the product:
  • meets the needs, characteristics and objectives of the target market;
  • does not adversely affect groups of retail customers in the target market, including groups of retail customers with characteristics of vulnerability; and
  • avoids causing foreseeable harm in the target market;
• ensure that the intended distribution strategy is appropriate for the target market; and
• require the manufacturer to take all reasonable steps to ensure that the product is distributed to the identified target market.

Evidencing Compliance and Best Practice

Complying with the Consumer Duty is one thing – but evidencing that compliance to the FCA is another. The FCA has continued to publish guidance, including PRIN 2A[1], PS22/9[2] and FG22/5[3]. These guidance updates are intended to enable firms to learn from each other; helping them to understand best practices and adapt those to their own business structure.

Most recently the FCA has emphasised the importance of consumer understanding. This stems from the Communications Outcome: communications which equip customers to make effective, timely and properly informed decisions about financial products and services. It is crucial that such information is presented in a way the particular customer can understand, which requires flexibility and innovation.

The FCA recently concluded a review on this issue and has published its findings on 13 March 2026[4]. It combined supervisory findings, form data, behavioural research, and extensive engagement with industry bodies, charities and consumer groups to build a comprehensive picture of current practice.

The highlights of best practices were:

• Clear, fair and balanced promotions. Rather than hiding risks in the small print, these should be presented with equal prominence to the benefits of a product. Sales jargon should be replaced with simple and unambiguous language, and firms should check that the key messages they are presenting are in fact being received.
• That leads into testing communications. You have to check that customers are understanding the content of your communications and that those key messages are being received in the way you intended. Surveys, comprehension checks and ‘before and after’ testing have been recommended.
• Such checks should cover a range of insights. Multiple sources should be used including call listening, complaints, chat transcripts and drop-off data (i.e. customers you are losing). This is important because all customers engage differently – some are more comfortable communicating by phone or email, whilst others may simply stop using your organisation without explaining why they’ve taken that decision. If you want a genuine insight into your whole customer base, its crucial you review a range of insight forums. One firm used website analytics to identify where customers became stuck during the sales process, updated that process and re-reviewed the website analytics to see if this had improved customer engagement.
• The same principle applies to how you communicate in the first place. Support customers with characteristics of vulnerability by identifying their needs at an early stage an adapting communications accordingly.

The areas for improvement were:

• Weak evidence of testing. Saying you’ve tested your communications is not enough; the FCA requires evidence to show such testing was not superficial or one-off.
• Unclear use of intel. Some firms were gathering evidence which they did not know how to interpret. It is important you collect relevant data which actually informs your understanding of the customer’s own understanding.
• Limited testing. Some firms did not test communications with people exhibiting vulnerable characteristics, so it was unclear if their changes did in fact improve customer understanding for these groups.
• No follow up. Making the changes is not enough; the FCA needs firms to evidence that they have followed up to determine whether those changes were in fact effective.

Further FCA Guidance in the light of unstable political environment

Since them the FCA’s Director of Cross Cutting Rules has explained via an article addressed to regulated firms, posted on the FCA’s website on 26^th May 2026, that the FCA “expect you to have embedded the Duty and to monitor outcomes actively, identifying where consumers are at risk of harm in a rapidly changing environment”.

Price & Value

Given current global uncertainties and challenges to the cost of living, the FCA is now emphasising that they want firms to regularly review whether their customers are receiving fair value as circumstances change. The FCA has indicated that they want firms to monitor outcomes for higher-risk customer groups and to take action (such as reducing costs, charges etc) if some of their products no longer represent fair value. There is no indication as to what constitutes fair value; however, it would be sensible to benchmark vs. other offerors in the same market

Enforcement

To date, the FCA has generally used formal enforcement as a last resort to warn other market participants. Instead, the FCA has focussed more on intervention and persuasion to cajole firms into compliance.

The FCA’s Director of Competition explained that: ‘And our message very much to consumers is: If you’re unhappy with any aspect of your financial services, of course complain to your provider, and if you’re not happy with the response you get then the Financial Ombudsman Service is there as well to deal with any of those concerns.’

The FCA continues to “encourage firms to innovate the ways in which they communicate with and support their customers” and remains mindful that whilst the expectations apply to firms of all sizes “approaches may be proportionate to a firm’s scale and resources”.

If you are in need of advice regarding how to implement the Consumer Duty within your corporation, please do not hesitate to contact our team here at Collyer Bristow.

[1] FCA Handbook – PRIN 2A The Consumer Duty

[2] https://www.fca.org.uk/publication/policy/ps22-9.pdf

[3] https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf

[4] Consumer understanding: good practice and areas for improvement | FCA