FCA Consumer Duty: One Year On

The FCA's Consumer Duty came into full effect on 31 July 2024, applying to all open products and services offered by regulated firms. It replaced older conduct of business requirements with a single overarching principle: firms must act to deliver good outcomes for retail customers. One year on, the Duty is reshaping how financial advice is delivered in the UK.

What the Consumer Duty Requires

The Consumer Duty is built around a new Consumer Principle: "A firm must act to deliver good outcomes for retail customers." This is supported by three cross-cutting rules and four outcome areas:

The three cross-cutting rules require firms to: act in good faith towards retail customers; avoid causing foreseeable harm to retail customers; and enable and support retail customers to pursue their financial objectives.

The four outcomes cover: products and services (ensuring products are designed to meet the needs of the target market); price and value (ensuring customers receive fair value); consumer understanding (ensuring communications help customers make informed decisions); and consumer support (ensuring customers receive adequate support throughout the product lifecycle).

How It Has Changed Financial Advice

The practical impact on financial advice firms has been significant. The FCA's first annual review, published in late 2025, highlighted several areas where the Duty has driven change:

Suitability and evidencing outcomes. Firms are now required to evidence that their advice delivers good outcomes, not just that it was suitable at the point of sale. This means ongoing suitability assessments, regular reviews, and clearer documentation of why a particular product or strategy was recommended. The FCA has indicated that it expects to see firms proactively identifying and addressing poor outcomes, rather than waiting for complaints.

Fee transparency and value assessments. The Duty requires firms to demonstrate that their charges represent fair value. Many advice firms have conducted formal value assessments of their services and published clearer fee schedules as a result. The FCA has been particularly focused on ongoing advice charges — firms must show that the ongoing service they provide justifies the ongoing fee they charge. For more on typical costs, see our guide to financial adviser fees.

Product governance. Product manufacturers (such as platform providers and fund managers) must design products with a clear target market in mind, and distributors (including advisers) must ensure they only recommend products to customers within that target market. This has led to some rationalisation of product ranges and clearer product documentation.

Clearer communications. The consumer understanding outcome has driven improvements in how firms communicate with clients. Suitability reports, annual review documents, and product literature are being made clearer and more accessible. The FCA has emphasised that firms should test whether their communications are actually understood by the people they are intended for.

What It Means for Consumers

For consumers seeking financial advice, the Consumer Duty provides stronger protections than the previous regulatory framework. In practical terms, consumers should expect:

• Clearer explanations of fees, including what ongoing charges cover
• More regular reviews to ensure advice remains suitable as circumstances change
• Products that are designed for people like them, not one-size-fits-all solutions
• Better support when things go wrong or circumstances change

The FCA has also made clear that the Consumer Duty sits alongside existing protections such as the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service. For a full overview of how regulation protects consumers, see our guide to financial regulation.

Enforcement and Outlook

The FCA has stated that it will take a data-led approach to enforcing the Consumer Duty, using management information reported by firms to identify potential issues. The regulator has also indicated that it will take action where firms are not meeting the required standards, including through supervisory interventions, skilled persons reviews, and enforcement proceedings where necessary.

The FCA publishes regular updates on its Consumer Duty work at fca.org.uk/firms/consumer-duty.