Insights ¦ Final non-Handbook Guidance for firms on the Consumer Duty

ey Take Aways

1. The Consumer Duty establishes a proactive, outcome-focused standard requiring firms to prioritise delivering good outcomes for retail customers across the entire product lifecycle.

2. It comprises a Consumer Principle 12, supported by cross-cutting rules around acting in good faith, avoiding foreseeable harm, and enabling customers to pursue financial objectives.

3. Firms must identify and comprehensively monitor customer outcomes, analysing data and customer feedback to detect poor outcomes or systemic issues.

4. Emphasis is placed on acting reasonably, with firms expected to tailor communication, support, and product design to meet the needs of diverse customer segments, including vulnerable groups.

5. The framework underscores explicit senior management accountability, including regular board reviews and a clear champion to embed the Duty within firm culture and governance.

6. Firm governance should be aligned with purpose, leadership, people, and controls to ensure culture supports prioritisation of consumer outcomes.

7. Firms are expected to develop and continuously refine hypothesis-driven monitoring, testing communication effectiveness, and adapting processes based on evidence.

8. Clarity, simplicity, layered information, and timely communication are core to supporting customers’ understanding and enabling effective decision-making.

9. Support channels should be accessible, proportionate, and flexible, especially for vulnerable customers, without creating unreasonable barriers or costs.

10. Firms must avoid ‘sludge’ practices—unnecessary barriers or friction designed to hinder customers’ ability to act in their best interest—taking care to balance friction’s positive and negative effects.

11. The framework highlights the importance of monitoring outcomes among specific groups sharing protected characteristics, promoting fairness and avoidance of discrimination.

12. The emphasis on monitoring and data collection is designed to drive continuous improvement, with firms responsible for demonstrating how their actions improve or sustain positive customer outcomes.

Key Statistics

• 46% of UK adults, equivalent to 24 million people, exhibit one or more characteristics of vulnerability (2020 Financial Lives Survey).

• 17.7 million adults (34%) have poor or low levels of numeracy involving financial concepts.

• Approximately 18.6% of bank customers and 17.5% of insurance customers experiencing issues did not report problems, indicating underreporting of consumer support issues.

• Studies demonstrate that simplifying communication, such as using icons or Q&A formats, can improve consumer understanding by up to 36-34%.

Key Discussion Points

• The framework’s shift towards a 360-degree, outcome-based approach requiring firms to regularly assess and respond to customer results.

• The importance of embedding a culture where delivering good outcomes is central to purpose, leadership, and incentive structures.

• Senior management’s role in conducting at least annual reviews and ensuring accountability for consumer outcomes.

• The necessity of tailoring communications, support, and product design to the characteristics, needs, and vulnerabilities of customer segments.

• The role of continuous testing and monitoring—using qualitative and quantitative methods—to ensure communications are effective and understood.

• How firms should identify and mitigate foreseeable harm throughout the customer journey, including product design, communication, and support.

• The significance of documenting decision-making, actions taken, and outcomes achieved to meet regulatory expectations.

• The importance of understanding the differential effects on protected groups, with monitoring tailored to transparency and fairness.

• The need for effective, adaptable support channels capable of offering timely and accessible support, especially for vulnerable customers.

• The risk that friction points can serve as ‘sludge’ practices, deterring customers from acting in their best interest; careful design is required.

• The role of external and internal data analytics in tracking customer behaviour, satisfaction, and outcomes for evidence-based improvements.

• The overarching aim: fostering a resilient, culture-driven approach that actively drives better outcomes, fairness, and transparency for all retail customers.

Document Description

This article provides comprehensive guidance on the UK’s Consumer Duty, outlining expectations for firm culture, governance, customer outcome monitoring, and operational practices. It defines how firms should embed a proactive, outcome-driven approach focused on delivering fair, transparent, and effective support across product design, communication, and customer support. Emphasising board accountability and continuous improvement, the article offers practical insights on assessing client outcomes, managing risks, and ensuring fair treatment—especially for vulnerable groups—within a regulatory framework designed to promote consumer trust and market integrity.