FCA Consumer Duty: What It Means for UK Consumers

What the Consumer Duty is

The FCA Consumer Duty (formally Principle 12, codified at PRIN 2A in the FCA Handbook) sets the standard of care that all FCA-regulated firms must provide to retail customers. It came into force on 31 July 2023 for open products and services, and on 31 July 2024 for closed products (products no longer on sale to new customers). The FCA has confirmed Consumer Duty remains a priority in its 2025-2030 strategy.

The Duty moves beyond a compliance checklist. Rather than requiring firms to follow prescriptive rules, it requires firms to take responsibility for delivering genuine good outcomes and to be able to evidence this. The overarching Consumer Principle states: a firm must act to deliver good outcomes for retail customers. Three cross-cutting rules underpin this: act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives.

The four outcomes in practice

Outcome 1: Products and services (PRIN 2A.3). Firms must design products that meet the genuine needs of their intended target market, regularly review whether products continue to meet those needs, and not sell to consumers outside the target market. The FCA's intervention requiring the pause of GAP insurance sales in 2024, after finding it failed to deliver fair value, is a direct example of enforcement through this outcome.

Outcome 2: Price and value (PRIN 2A.4). Firms must ensure the price a consumer pays is reasonable relative to the overall benefits received. Hidden costs, poor-value renewal pricing, and cross-subsidy models that disadvantage loyal or less active customers are within scope. The FCA's premium finance market study (MS24/2, published February 2026) examined whether consumers who borrow to pay for motor and home insurance premiums are receiving fair, competitive deals.

Outcome 3: Consumer understanding (PRIN 2A.5). Firms must communicate in a way that enables effective, timely, and properly informed decisions. The FCA's March 2026 publication on consumer understanding good practice made clear that technically accurate disclosure does not, by itself, satisfy this outcome. Information must genuinely support decision-making.

Outcome 4: Consumer support (PRIN 2A.6). Firms must provide a level of support that meets customers' needs throughout the entire customer relationship. This includes accessible complaints processes, no unreasonable barriers to switching or cancelling a product, and referral to free debt advice where a consumer is in financial difficulty.

What Consumer Duty does not do

Consumer Duty does not create a fiduciary relationship between a firm and its customer. A firm that sells a product - rather than advises on one - is not required to ensure the product is suitable for the individual in the way an advice firm would be. Consumer Duty requires good outcomes at the level of the target market and the firm's distribution; it does not convert all product sales into advisory relationships.

Consumer Duty also does not apply to wholesale business between regulated firms, or to activities where the firm does not interact with retail customers. The FCA is consulting in the first half of 2026 on how the Duty applies across multi-party distribution chains.

How consumers can use Consumer Duty

Consumer Duty is primarily a regulatory obligation on firms, enforced by the FCA. Individual consumers cannot bring a private action solely on grounds of Consumer Duty breach. However, Consumer Duty is highly relevant to complaints. Where a consumer believes a firm has not delivered a good outcome - for example, the consumer was sold a product that did not meet their needs, was charged a price that was not fair value, received unclear information, or was denied appropriate support - referencing Consumer Duty in a complaint to the firm strengthens the basis of that complaint.

The Financial Ombudsman Service takes Consumer Duty into account when determining what is fair and reasonable. Following the March 2026 FOS reform consultation response, FCA rules (including Consumer Duty) will play a more explicit role in FOS determinations when relevant rules exist for the type of complaint. This means a complaint that clearly demonstrates a Consumer Duty failure is now better positioned at FOS than under previous regulatory frameworks.

FCA enforcement and firm reviews in 2025/26

The FCA's Consumer Duty focus areas for 2025/26 include four cross-cutting multi-firm reviews: how firms design products and services for their target market; how firms monitor consumer outcomes; how customer journeys are structured (including use of friction to deter switching or complaints); and whether communications genuinely support informed decisions. The FCA has stated it may request data directly from firms and will provide feedback to support implementation. Firms that cannot demonstrate compliance face supervisory challenge and, in significant cases, enforcement action.

The pure protection insurance market, unit-linked pensions, and premium finance are among the sectors under active FCA review for the price and value outcome. The FCA has signalled it will challenge individual firms and pursue enforcement action where fair value is not being delivered.

Vulnerable customers and Consumer Duty

Consumer Duty places specific emphasis on vulnerable customers - those who may be less able to protect their interests due to personal circumstances such as health conditions, low financial resilience, or a recent significant life event. Firms must identify potential vulnerability, adapt their communications and support accordingly, and monitor whether vulnerable consumers are experiencing different outcomes from other consumers. The FCA has confirmed that working with the ICO to clarify how firms balance Consumer Duty obligations with data protection requirements is a 2026 priority.

What is the FCA Consumer Duty?

The FCA Consumer Duty is Principle 12 of the FCA Handbook (PRIN 2A), which came into force July 2023. It requires all FCA-regulated firms to act to deliver good outcomes for retail customers across four areas: products and services, price and value, consumer understanding, and consumer support.

Does Consumer Duty apply to my bank?

Yes. Consumer Duty applies to all FCA-regulated firms that serve retail customers, including banks, insurers, mortgage lenders, consumer credit providers, investment firms, and payment service providers.

Can I sue a firm for breaching Consumer Duty?

Consumer Duty does not create a new right of private action. However, breach of Consumer Duty is relevant to complaints to the firm and to the Financial Ombudsman Service, where it informs what FOS considers fair and reasonable.

What is the difference between Consumer Duty and Treating Customers Fairly?

Consumer Duty replaces and significantly expands on the previous Treating Customers Fairly (TCF) principle. TCF was largely outcomes-based but high-level; Consumer Duty is more specific, requires firms to actively evidence consumer outcomes, and introduced the four distinct outcomes framework with specific rules under each.

What can I do if a firm gives me unclear information about a financial product?

Unclear information that prevents an informed decision may be a breach of the consumer understanding outcome (PRIN 2A.5). Raise a formal complaint with the firm citing Consumer Duty. If the firm does not resolve the complaint within 8 weeks or the response is unsatisfactory, the Financial Ombudsman Service can investigate free of charge.

Does Consumer Duty apply to Buy Now Pay Later?

From 15 July 2026, Buy Now Pay Later (Deferred Payment Credit) comes within FCA regulation. Consumer Duty will apply to FCA-authorised BNPL lenders from that date for new agreements entered into under the regulated regime.