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Introducing the FCA’s New Consumer Duty

Introducing the FCA’s New Consumer Duty

The Financial Conduct Authority’s (FCA’s) new Consumer Duty is most likely to be tested in R01 or CF1. You might also find that it could come up in R06.

The FCA has identified that firms in retail financial markets are not consistently and sufficiently prioritising good customer outcomes, which causes consumer harm and erodes consumer trust. Customers are not given the information they need to make good decisions and are sold products and services that do not offer the benefits they might expect.

The aim of the FCA’s new Consumer Duty is therefore to ensure that:

  • firms consistently place consumers’ interests at the centre of their businesses and extend their focus beyond ensuring narrow compliance with specific rules, to focus on delivering good outcomes for consumers;
  • competition is effective in driving market-wide benefits, with firms competing to attract and retain customers based on high standards and innovate in pursuit of good consumer outcomes; and
  • consumers get products and services which are fit for purpose, provide fair value, that they understand how to use and are supported in doing so.

CP21/13 and CP21/36

The FCA’s first consultation, CP21/13, outlined the FCA’s high-level proposals to deliver the new Consumer Duty, including:

  • a new Consumer Principle to provide an overarching standard of conduct;
  • a set of cross-cutting rules; and
  • outcomes that support the new Consumer Principle by setting expectations for firms’ in terms of their cultures and behaviour.

The second consultation paper, CP21/36, includes proposed draft Handbook rules and guidance, as well as the FCA’s responses to feedback received on the first consultation paper. 

The Financial Conduct Authority’s (FCA’s) new Consumer Duty is most likely to be tested in R01 or CF1. Click To Tweet


A new Consumer Principle

The Consumer Principle will replace two of the FCA’s Principles for regulated firms:

  • Principle 6 – a firm must pay due regard to the interest of its customers and treat them fairly; and
  • Principle 7 – a firm must pay due regard to the information needs of its clients and communicate information to them in a way that is fair and not misleading.

Cross-cutting rules

Three cross-cutting rules underpin the new Principle. Firms must:

  • act in good faith towards retail customers;
  • avoid foreseeable harm to retail customers; and
  • enable and support retail customers to pursue their financial objectives. 


The FCA expects to see good outcomes in four areas:

  • products and services;
  • price and value;
  • consumer understanding; and
  • consumer support. 


In short, under the new Consumer Duty, firms must put themselves in customers’ shoes when communicating and designing products.

The FCA expects to publish their policy statement by 31 July 2022.

To view CP21/13 in full visit this page.

To view CP21/36 in full visit this page.

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