As a consumer, navigating the world of financial products and services—from mortgages and credit cards to pensions and insurance—can be daunting. Recognising this, the Financial Conduct Authority (FCA) introduced a new standard called Consumer Duty, which came into effect in July 2023. But what exactly is Consumer Duty, and how does it benefit you?
What Is Consumer Duty?
The ‘Consumer Duty’ (the Duty) can be explained as a set of rules and principles developed by the FCA aimed at ensuring financial firms put customer needs first. It goes beyond previous regulations by setting a higher standard of care, requiring firms not just to avoid causing harm, but to actively deliver good outcomes for consumers.
At the heart of the Duty is a new “Consumer Principle” which states that “A firm must act to deliver good outcomes for retail customers.”
This principle is supported by three key rules that require firms to:
- Act in good faith toward customers.
- Avoid foreseeable harm to customers.
- Enable and support customers to pursue their financial objectives.
How Does This Help You as a Consumer?
Here’s how Consumer Duty translates into real benefits for you:
1. Clearer Communication
Firms must provide information that is easy to understand, not just legally accurate. This means fewer confusing terms and clearer explanations of risks, fees, and benefits—so you can make informed decisions with confidence.
2. Better Support
Companies must ensure their customer service is accessible and responsive. Whether you’re raising a complaint or asking for help, you should get timely, helpful support—especially if you’re vulnerable or in financial difficulty.
3. Fair Value for Money
Under Duty, firms must ensure that their products and services offer fair value. That means pricing must be justified by the benefits you receive. You’re less likely to be overcharged or sold something that doesn’t meet your needs.
4. More Suitable Products
Financial products must be designed with the customer in mind. Firms are required to consider whether a product is appropriate for the target audience and must continually monitor its performance to ensure it’s delivering the expected outcomes.
What Should You Expect?
As a consumer, you may not immediately notice drastic changes, but over time, you should see:
- Improved transparency in product terms and conditions.
- Fewer misleading promotions and marketing materials.
- Quicker and more effective complaint handling.
- Products that are more closely tailored to your needs.
If you believe a firm is not meeting its obligations under Consumer Duty, you can still complain directly to the company—and if unresolved, escalate it to the Financial Ombudsman Service.
Final Thought
Consumer Duty is a bold step toward a more ethical and transparent financial services industry in the UK. By holding firms to higher standards, it empowers you to make smarter financial choices and expect better treatment across the board. While it doesn’t eliminate all risks, it does tilt the balance more in your favour—putting your financial wellbeing at the core of how firms must operate.
Stay informed, ask questions, and don’t hesitate to challenge poor practices—because under Consumer Duty, your voice carries even more weight.