FCA Consumer Duty: Delivering Good Outcomes for Retail Customers

Introduction - FCA Consumer Duty: Delivering Good Outcomes for Retail Customers

Consumer Duty transformed retail financial services regulation. Taking effect in July 2023, the Duty sets higher standards than previous conduct rules, requiring firms to deliver good outcomes for retail customers. For payment institutions, EMIs, banks, and other regulated firms serving retail customers, Consumer Duty isn't optional compliance. It's fundamental to how you must operate.

The FCA's supervisory approach centres on Consumer Duty. When the regulator identifies poor customer outcomes, they examine whether you're meeting Duty obligations. Failures lead to enforcement action, business restrictions, and significant financial penalties. Recent FCA communications make clear that Consumer Duty compliance remains a top priority.

What Consumer Duty Requires

The FCA Consumer Duty consists of Principle 12, three cross-cutting rules, and four outcomes. Principle 12 requires firms to act to deliver good outcomes for retail customers. The cross-cutting rules require acting in good faith towards retail customers, avoiding foreseeable harm to retail customers, and enabling and supporting retail customers to pursue their financial objectives.

The four outcomes cover products and services, price and value, consumer understanding, and consumer support. Products and services must be designed to meet the needs of customers in the target market and perform as firms have led customers to expect. Price and value must be fair, with charges reasonable considering the benefits provided. Consumer understanding must be supported through clear communications at the right time. Consumer support must be fit for purpose and appropriate for characteristics of customers.

Why It Matters for Your Business

Consumer Duty changes how firms operate. Previous conduct rules focused on processes and controls. The Duty focuses on outcomes. You must demonstrate that retail customers receive good outcomes, not just that you have compliant processes.

For payment firms and EMIs, this means assessing whether your products meet customer needs, your fees represent fair value, your communications enable understanding, and your support channels work for your customer base. For banks, it means examining retail banking products across current accounts, savings, loans, overdrafts, credit cards, and mortgages against the same standards.

The FCA's supervisory reviews focus on firms' delivery of good outcomes. Where outcomes are poor, the regulator examines root causes. If poor outcomes result from inadequate oversight, business model issues, or cultural failings, enforcement follows.

The Four Outcomes in Practice

Products and services must meet the needs of customers in the target market. This requires identifying who your product is designed for, testing whether it meets their needs, monitoring actual usage, and taking action when products don't deliver intended outcomes. For payment firms, this might mean assessing whether account features match customer needs, whether fee structures are appropriate, and whether service levels deliver expected outcomes.

Price and value assessment examines whether charges are reasonable. The FCA doesn't regulate pricing directly but requires you to assess fair value considering what customers receive, what they pay, what alternatives cost, and what outcomes customers experience. If your assessment shows poor value, you must take action.

Consumer understanding requires effective communications. This goes beyond regulatory disclosures. You must ensure customers understand what they're buying, what it costs, how it works, and how to get help.

Communications must be clear, timely, and accessible. For complex products or services, this means investing in plain language explanations and testing whether customers actually understand.

Consumer support must be appropriate and accessible. This means having support channels suitable for your customer base, providing responsive assistance when needed, handling complaints effectively, and supporting vulnerable customers appropriately. The FCA expects firms to monitor support quality and take action when customers aren't getting adequate help.

Vulnerable Customers

Consumer Duty requires particular focus on vulnerable customers. Vulnerability can result from health conditions, life events, resilience issues, or capability factors. Firms must identify vulnerability indicators, provide appropriate additional support, monitor outcomes for vulnerable customers, and take action when vulnerable customers experience poorer outcomes than others.

For payment firms, this might mean identifying customers in financial difficulty and providing support before problems escalate. For banks, it means ensuring vulnerable customers can access services, receive clear communications appropriate to their circumstances, and get additional help when needed.

Outcomes Monitoring

Consumer Duty requires systematic outcomes monitoring. You must collect and analyse data showing whether customers are getting good outcomes. This includes product performance metrics, value assessments, communication effectiveness testing, support quality measures, complaints analysis, and vulnerable customer outcomes.

Your board must receive regular reporting on outcomes. When monitoring identifies poor outcomes, you must investigate root causes and take remedial action. The FCA expects you to demonstrate continuous improvement driven by outcomes data.

FCA Supervisory Focus for 2025/26

The FCA published supervisory focus areas for 2025/26 based on findings from Consumer Duty reviews. Cross-cutting issues include poor governance and oversight, inadequate management information on outcomes, insufficient challenge to business models delivering poor value, weak monitoring and continuous improvement, and inadequate support for vulnerable customers.

Sector-specific findings reveal particular challenges. For payments firms, issues include unclear fee structures, inadequate fraud prevention and customer support, and poor communications about service limitations. For banks, concerns cover overdraft pricing and support, savings rate competitiveness, and mortgage customer treatment during rate changes.

The FCA's portfolio approach means firms exhibiting these issues will face enhanced supervision, potential enforcement action, and requirements to implement improvements.

How Buckingham Capital Consulting Helps

Since 2013, we've specialised in helping payment institutions, EMIs, and banks implement regulatory requirements that actually improve business outcomes.

We start with comprehensive gap analysis, assessing your products and services against the four outcomes, evaluating your outcomes monitoring and management information, reviewing governance and board oversight, assessing vulnerable customer identification and support, and examining how Consumer Duty integrates with complaints handling and root cause analysis. You receive specific identification of gaps, prioritised actions based on regulatory urgency and customer impact, and a clear roadmap with accountability.

For products and services assessment, we help you identify target markets for each product, assess whether products meet those markets' needs, evaluate product performance and customer usage, identify where products fall short of expectations, and implement changes improving outcomes.

Price and value assessment requires structured methodology. We help you establish assessment frameworks considering benefits provided, charges applied, alternative product pricing, and customer outcomes achieved. We help you gather necessary data, conduct fair value assessments, identify products providing poor value, and implement pricing or product changes.

Consumer understanding testing determines whether communications work. We help you review key communications for clarity and accessibility, test whether customers understand what you've told them, identify where communications fall short, and implement improvements ensuring customers can make informed decisions.

Consumer support assessment examines whether customers can get help when needed. We review support channels and accessibility, assess response times and quality, evaluate complaints handling effectiveness, test vulnerable customer support, and implement improvements ensuring appropriate support.

Vulnerable customer frameworks require specific capability. We help you implement identification processes recognising vulnerability indicators, establish additional support appropriate to different vulnerability types, train staff on recognising and responding to vulnerability, monitor outcomes for vulnerable customers, and demonstrate to the FCA that vulnerable customers receive good outcomes.

Outcomes monitoring frameworks must deliver meaningful insights. We help you establish monitoring covering the four outcomes, implement data collection and analysis processes, design management information for boards and senior management, create action triggers when monitoring identifies poor outcomes, and demonstrate continuous improvement.

Governance and oversight determine whether Consumer Duty becomes embedded or remains compliance theatre. We help you establish board reporting on Consumer Duty compliance and outcomes, implement senior management accountability for outcomes in their areas, create challenge processes ensuring poor outcomes drive action, and integrate Consumer Duty into business planning and decision-making.

When the FCA raises concerns about Consumer Duty compliance, response quality matters. We help you prepare responses to FCA correspondence demonstrating understanding and credible remediation, prepare for supervisory meetings addressing regulator concerns, and provide ongoing liaison managing regulatory expectations throughout improvement programmes.

We provide staff training on Consumer Duty covering the Duty's requirements and implications, roles and responsibilities in delivering good outcomes, how to identify and escalate concerns about outcomes, and vulnerable customer recognition and support.

Why Consumer Duty Cannot Wait

The FCA's supervisory intensity around Consumer Duty continues. Recent communications make clear that delivering good outcomes isn't optional. Firms that don't meet Duty requirements face enhanced supervision, enforcement action, business restrictions, and reputational damage.

Consumer Duty compliance done properly improves business outcomes. Better products that meet customer needs. Fair pricing building trust. Clear communications reducing confusion and complaints. Effective support improving customer satisfaction. These aren't compliance costs. They're business improvements.

Contact Buckingham Capital Consulting to discuss your Consumer Duty compliance. With over 14 years of specialist expertise helping payment institutions, EMIs, and banks deliver regulatory requirements, we know what the FCA expects and how to implement solutions that improve both compliance and business outcomes.

Email us at info@buckinghamcapitalconsulting.co.uk or call 0207 866 2512