What changed in July 2023 and why
The Consumer Duty is a higher standard of consumer protection introduced by the Financial Conduct Authority on 31 July 2023. It applies to every authorised firm that deals with retail customers and replaces the previous standard known as Treating Customers Fairly (TCF). The Duty came into force in two phases: 31 July 2023 for products and services available to buy or renew. It applied to closed and legacy products that were no longer being marketed from 31 July 2024.
The change matters because it raised the legal bar. Under the previous standard, firms were required to "treat customers fairly". Under the Duty, firms must "act to deliver good outcomes for retail customers". The shift moves the focus from process to result. A firm can now fall short of the Duty even where every individual rule has been followed, if the outcome the customer experienced was not a good one.
Before the Duty, firms had to treat customers fairly. Under the Duty, firms must actively deliver good outcomes. The legal standard moved up.
The fundamental shift in 2023
The FCA introduced the Duty in response to evidence that the previous regime had not consistently delivered for consumers, particularly those in vulnerable circumstances. A 2023 FCA review of vulnerable customer outcomes found that 44 per cent of vulnerable customers reported negative experiences with financial firms, compared with 33 per cent of non-vulnerable customers. The Duty was designed to close that gap by requiring firms to design their products, prices and services around customer outcomes from the outset.
Principle 12: the new consumer principle
The Consumer Duty sits at the top of the FCA Principles for Businesses as Principle 12. The wording is short and is reproduced verbatim in every authorised firm's compliance documentation:
A firm must act to deliver good outcomes for retail customers.
FCA Principle 12 · In force 31 July 2023
Principle 12 sits above twelve other Principles in the FCA Handbook (covering integrity, skill and care, financial prudence, market conduct and so on). The other Principles continue to apply, but Principle 12 takes precedence in any matter involving retail customers. Where Principle 12 conflicts with one of the other Principles, the firm must comply with Principle 12.
The detailed rules underpinning Principle 12 sit in a section of the FCA Handbook called PRIN 2A. This section runs to several thousand words and is divided into the cross-cutting rules (PRIN 2A.2), the four outcomes (PRIN 2A.3 to 2A.6), governance requirements (PRIN 2A.8) and monitoring requirements (PRIN 2A.9). The full guidance on how the FCA expects firms to interpret these rules is in finalised guidance FG22/5, which sits alongside the Handbook.
The three cross-cutting rules
Beneath Principle 12 sit three rules that apply across every interaction a firm has with retail customers. These are described as "cross-cutting" because they cut across all four of the outcome rules and apply at every stage of the customer relationship.
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Act in good faith towards retail customers
Firms must behave honestly, with fair dealing and openness. They must not exploit customer behavioural biases, lack of knowledge or vulnerability. The standard goes beyond the legal duty of honesty: it requires firms to consider the customer's interests as well as their own.
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Avoid causing foreseeable harm
Firms must take reasonable steps to anticipate and prevent harm to retail customers. The harm does not need to be intended or even probable; it is sufficient that the harm is reasonably foreseeable. The standard applies through the entire distribution chain, not only at the point of sale.
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Enable customers to pursue their financial objectives
Firms must support customers in making informed decisions and achieving their financial objectives. This includes ensuring information is accessible, that switching is not unnecessarily difficult and that customers in difficulty are helped to find appropriate solutions rather than being penalised or abandoned.
The cross-cutting rules apply in addition to the four outcome rules. A firm can comply with all four outcomes and still breach the Duty if it fails one of the cross-cutting tests. Equally, a firm can clearly comply with the cross-cutting rules and still fall short on a specific outcome.
The four outcomes
The four outcome rules cover the main areas where firms must demonstrate they deliver good results for retail customers. Each outcome has detailed FCA guidance setting out what compliance requires in practice.
| Outcome | Handbook reference | What it requires |
|---|---|---|
| Products and services | PRIN 2A.3 | Products must be designed and distributed to meet the needs of identified target markets |
| Price and value | PRIN 2A.4 | Prices must offer fair value relative to the benefits the consumer receives |
| Consumer understanding | PRIN 2A.5 | Communications must equip consumers to make informed decisions |
| Consumer support | PRIN 2A.6 | Customer service must enable consumers to use products as expected and act in their interests |
Why does "fair value" not simply mean cheap?
The fair value rule is comparative, not absolute. A product offers fair value where the price the consumer pays is reasonable in relation to the benefits the consumer receives. A high price can offer fair value if the benefits justify it; a low price can fail the test if the product delivers little. The FCA expects firms to evidence the fair value assessment with data, not assertion. This is one of the most contested areas of the Duty in practice and continues to be a focus of FCA supervisory work in 2026, with market studies under way into pure protection insurance, unit-linked pensions and premium finance.
Vulnerable customers and the Duty
The Duty applies to all retail customers, but it requires firms to give particular attention to those in vulnerable circumstances. The FCA defines a vulnerable customer as one who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care. The four drivers of vulnerability identified in FCA guidance FG21/1 are health, life events, resilience and capability.
| Driver | Examples | What firms must do |
|---|---|---|
| Health | Disability, mental health conditions, terminal illness | Adjust communications and processes to suit the individual's needs |
| Life events | Bereavement, divorce, redundancy, caring responsibilities | Provide appropriate flexibility and avoid penalising distress |
| Resilience | Low or unstable income, low savings, debt | Avoid products and pricing that exacerbate financial fragility |
| Capability | Low literacy or numeracy, language barriers, low digital skills | Make information accessible and avoid relying on assumed knowledge |
FCA research published in 2025 found that firms are now broadly focused on delivering good outcomes for vulnerable retail customers, with the Duty driving improvements in customer support. Customers with multiple characteristics of vulnerability continue to report particular challenges. The FCA does not require firms to identify every vulnerable customer. It does require firms to design products and processes flexibly enough to support customers whose vulnerability becomes apparent at any stage of the relationship.
Using the Duty in a complaint
The Duty's primary value to consumers is in complaints. A complaint that references the Duty directly, by reference to specific Handbook provisions and the outcome the consumer experienced, is significantly more powerful than a complaint that simply alleges unfairness in general terms. The Financial Ombudsman Service applies the Duty in deciding complaints about products available to buy or renew on or after 31 July 2023. The Duty has applied to closed and legacy products since 31 July 2024.
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Identify which outcome was breached
Decide whether the complaint is about a product that did not meet your needs (Products and Services), a price that was not fair value (Price and Value), information that was not clear (Consumer Understanding) or support that was not adequate (Consumer Support). One outcome usually fits the situation more clearly than the others.
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Reference the cross-cutting rule that applies
Identify whether the firm failed to act in good faith, failed to avoid foreseeable harm or actively prevented you from pursuing your financial objectives. Citing the cross-cutting rule by name in the complaint frames the firm's conduct in the language the FCA itself uses.
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Describe the outcome you experienced
Set out clearly what happened to you, including any financial loss, distress or inconvenience. The Duty is about outcomes for the customer; the firm's process is secondary. A description focused on the impact you experienced is more compelling than a focus on procedural failures alone.
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Propose a specific remedy
Specify the remedy you are seeking, framed as putting you back in the position you would have been in had the firm complied with the Duty. Refund, recalculation of charges, removal of credit-file markers and compensation for distress are typical components.
Complaints citing the Duty have succeeded across all sectors of UK financial services since 2023. The Duty has been particularly significant in cases involving fair value (such as premium finance and unit-linked pensions), consumer understanding (such as buy-now-pay-later promotions and complex investment products) and consumer support (such as how firms treat customers in financial difficulty). Before relying on the Duty, confirm the firm is FCA-authorised: see our guide on verifying FCA authorisation. Where the firm is unauthorised, the Duty does not apply and a different route is needed (see our guide on scams and loan sharks).
Enforcement and supervisory action
The FCA has signalled clearly that 2026 marks the transition from Duty implementation to active supervision and enforcement. The four cross-cutting multi-firm reviews launched in 2025 (covering products and services design, outcomes monitoring, customer journeys and consumer communications) are due to publish findings through 2026. Sector-specific reviews are also under way for wealth management, model portfolio services, premium finance, pure protection insurance and unit-linked pensions.
The Duty is enforceable in addition to other rules
A firm can be sanctioned for breach of the Duty even where no other rule has been broken. A complaint or enforcement action can succeed on Duty grounds alone. The Duty is therefore a free-standing legal obligation, not a gloss on existing rules. This is particularly significant in cases where the firm complied with detailed rules but the outcome the consumer experienced was poor.
The FCA published joint guidance with the Information Commissioner's Office in Q1 2026 covering the interaction between the Duty's vulnerability requirements and data protection law. Further guidance on how the Duty applies in distribution chains (where multiple firms are involved in the same product) is expected in the first half of 2026. Firms should expect supervisory data requests focused on outcomes evidence rather than process compliance throughout 2026.
The Duty operates alongside other consumer-protection statutes. For credit products, the most important of these is the Consumer Credit Act 1974, which contains long-standing provisions on unfair relationships, early settlement and information rights that complement the Duty's outcomes-based approach.
Common misconceptions about the Duty
The Consumer Duty has been widely discussed since 2023. A number of common misconceptions have spread alongside the discussion. The four below are particularly worth addressing.
"The Duty only applies to new products sold after July 2023."
False. Since 31 July 2024, the Duty applies to closed and legacy products as well. A firm cannot avoid the Duty by stopping new sales of a product. Existing customers retain Duty protection.
"The Duty just restates Treating Customers Fairly (TCF) under a new name."
False. TCF was a high-level principle. The Duty is a granular rulebook with specific outcomes, monitoring requirements and accountability tests. The legal standard is materially higher.
"A firm can comply by ticking off the rules in PRIN 2A."
False. The Duty is outcomes-based. A firm can technically comply with every rule and still breach the Duty if the actual outcome the customer received was poor. Evidence of good outcomes is what the FCA wants to see.
"Consumers cannot rely on the Duty in court or at the Ombudsman."
False. The FOS applies the Duty as part of what is fair and reasonable. Courts apply the underlying Handbook rules. Complaints citing the Duty have succeeded since 2023.