TRW & Co · Financial services regulation
FCA Consumer Duty: What Firms Must Evidence in 2026
The FCA Consumer Duty requires retail financial services firms to prove, with data, that customers receive good outcomes on products, price and value, understanding and support. As of October 2026, the FCA is testing that evidence: through board report reviews, fair value work and vulnerability findings. This guide explains what firms must evidence and how proposed 2027 changes affect them.
Key pointThe FCA's main criticism of Consumer Duty board reports is not missing policies but weak data and absent challenge: conclusions unsupported by MI, no breakdown for vulnerable customers, and action plans without owners or deadlines.
At a glance
In force since 2023
The Duty applied from 31 July 2023 for open products and from 31 July 2024 for closed products and services, under Principle 12 and PRIN 2A.
Four outcomes to evidence
Firms must show good outcomes on products and services, price and value, consumer understanding and consumer support, backed by monitoring data and documented actions.
Annual board sign-off
At least annually the governing body must review and approve an outcomes report, confirm compliance and assess whether future strategy is consistent with the Duty.
Review of 180 reports
The FCA reviewed first-year board reports from 180 firms and found weak data quality, little distribution chain evidence and limited analysis of vulnerable customers.
Changes proposed for 2027
CP26/23, published in June 2026, proposes clearer scope, UK-only territorial reach and lighter board reporting. Final rules are expected in early 2027.
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The short answer: what the FCA Consumer Duty requires firms to evidence
The FCA Consumer Duty requires every firm doing retail financial services business to show, with data, that its customers receive good outcomes. It is not enough to have policies. Firms must evidence that products meet customers' needs, that prices represent fair value, that communications are understood, and that support works, including for customers in vulnerable circumstances.
The Duty came into force on 31 July 2023 for open products and on 31 July 2024 for closed products and services. As of October 2026 the regulator has moved from implementation to testing evidence. Its published reviews of board reports, fair value work and vulnerability show the same theme: firms that cannot prove outcomes with good management information (MI) are the ones that attract supervisory attention.
The Duty is also being refined. In June 2026 the FCA consulted on clarifying its scope and making it more proportionate, particularly for wholesale firms and firms in distribution chains. Those proposals are not yet final rules, so the existing standards continue to apply in full.
The legal framework: Principle 12 and PRIN 2A
The FCA Consumer Duty sits in the FCA Handbook rather than in an Act of Parliament. The FCA made it under its rule-making powers in the Financial Services and Markets Act 2000, and published the final rules in Policy Statement PS22/9. It has three layers.
- Principle 12. A firm must act to deliver good outcomes for retail customers. Where it applies, it replaces the older Principles on treating customers fairly and on communications for retail business.
- The cross-cutting rules. Firms must act in good faith, avoid causing foreseeable harm, and enable and support retail customers to pursue their financial objectives.
- The four outcomes. Products and services; price and value; consumer understanding; and consumer support. Each has detailed rules in PRIN 2A.
Two further parts of PRIN 2A matter most for evidence. PRIN 2A.9 requires firms to monitor the outcomes their customers actually receive. PRIN 2A.8 deals with governance: it requires a report to the governing body setting out the results of that monitoring, and at least annually the board must review and approve it, confirm whether the firm is complying, and assess whether its future strategy is consistent with the Duty.
The Duty applies to retail market business, including firms that manufacture or distribute products without dealing with the end customer. That reach into distribution chains is the source of much of the complexity and is the focus of the 2026 consultation, discussed below. Firms working across lending, payments and investments can find our financial services regulation team overview useful for how the Duty interacts with sector rules.
The four outcomes: what evidence the FCA expects
The FCA Consumer Duty is outcomes-based, so the question for every outcome is the same: what data shows customers are getting a good result, and what did you do when the data showed they were not? The table below summarises the evidence supervisors commonly look for.
| Outcome | What the rules require | Evidence that persuades |
|---|---|---|
| Products and services | Products designed for an identified target market, distributed appropriately and reviewed regularly. | Target market definitions, sales data showing who actually buys, product review minutes, changes made when take-up drifts outside the target market. |
| Price and value | The price paid must be reasonable relative to the overall benefits. | Documented fair value assessments covering all fees and charges, comparisons across customer groups, and evidence of action where some groups receive poor value. |
| Consumer understanding | Communications must equip customers to make effective, timely and properly informed decisions. | Testing of key communications, comprehension metrics, complaint themes about confusion, and changes made after testing. |
| Consumer support | Support must meet customers' needs, with no unreasonable barriers to switching, cancelling or complaining. | Journey times for cancelling compared with buying, call wait and abandonment data, outcomes for customers with characteristics of vulnerability. |
Outcome testing in practice
Outcome testing means checking what happened to real customers, not whether a process was followed. A sample file review that confirms a disclosure was sent says little about whether the customer understood it. Better evidence links customer behaviour to outcomes: for example, whether customers who received a renewal notice actually shopped around, or whether those flagged as vulnerable resolved problems as quickly as others.
The strongest firms set a small number of outcome measures for each product, define in advance what "good" looks like, and record what they did when a measure fell short. That last step, the action log, is often missing.
What FCA Consumer Duty reviews have found so far
The FCA has published several multi-firm reviews since the Duty began. Three are especially useful for any firm preparing its next board report or supervisory response.
Board reports
The FCA reviewed the first annual Consumer Duty board reports from 180 firms and published good practice and areas for improvement, updated in February 2026 with guidance for smaller firms. The best reports had a dedicated section on each of the four outcomes, supported conclusions with good-quality MI, analysed different customer groups, and showed a culture focused on outcomes.
The weaknesses were consistent: data that did not support the conclusions drawn; little evidence of information-sharing across the distribution chain; limited analysis of customers with characteristics of vulnerability; no visible challenge from the board; and action plans without owners, timescales or measures of success.
Customers in vulnerable circumstances
In March 2025 the FCA published its review of firms' treatment of customers in vulnerable circumstances. It found many positive actions and a renewed focus driven by the Duty, but areas for improvement remained, particularly in product design and outcomes monitoring. Its consumer research found that people with characteristics of vulnerability, especially multiple characteristics, still report worse outcomes than other consumers.
The FCA decided not to rewrite its vulnerability guidance, FG21/1, which it said remains relevant under the Duty. Instead it published case studies. The practical message is that firms should measure outcomes for vulnerable customers separately, not assume that a vulnerability policy is enough.
Fair value
Price and value has been a recurring supervisory priority across sectors such as insurance, consumer credit, savings and investment platforms. The common criticism is that fair value assessments are too high-level: they look at average customers and headline charges, and miss groups who pay more or receive less, such as long-standing customers, those on legacy products or those who rarely use a service they are paying for.
The single most useful test of your Consumer Duty evidence is whether a board member could explain, from the board report alone, which customers are receiving poor outcomes and what is being done about it. If the report only says that outcomes are "good overall", it is unlikely to satisfy the FCA.
How to build an evidence-led board report
The annual report is where the FCA Consumer Duty becomes visible to supervisors. It does not need to be long, but it does need to be specific. A proportionate process for most firms looks like this.
- Map products and roles. List each retail product or service, your role (manufacturer, distributor or both), and the other firms in each distribution chain.
- Set outcome measures. For each of the four outcomes, choose a small set of metrics with defined tolerances, including measures broken down by customer group and for customers with characteristics of vulnerability.
- Collect and test the data. Use complaints, Financial Ombudsman Service referrals, journey analytics, call data, sales patterns and qualitative feedback from frontline staff. Test data quality before drawing conclusions.
- Analyse differences, not averages. Identify where outcomes differ between groups, channels or products, and explain why.
- Record actions with owners. For each issue, set out the remediation, the owner, the deadline and the data that will show it worked. Consider whether past customers need redress.
- Board challenge and approval. Present the report to the governing body, minute the challenge, and record the board's conclusion on compliance and on whether strategy remains consistent with the Duty.
- Feed back into the business. Track the actions through the year and report progress in the next cycle.
Where Duty failings point to wider problems, such as historic poor value or misleading communications, firms should consider whether a past business review or redress exercise is needed. The motor finance experience, covered in our article on motor finance commission claims and the FCA redress scheme, shows how costly unresolved historic issues can become.
The 2026 consultation: clarifying scope and proportionality
On 29 June 2026 the FCA published consultation paper CP26/23, proposing changes to make the Duty clearer and more proportionate. The consultation closed in September 2026 and the FCA has indicated that a policy statement and final rules are expected in the first quarter of 2027. As of October 2026 these are proposals only.
The main proposals include:
- Clearer scope. Redefining "retail market business" and related concepts, moving away from the "material influence" test towards a firm's actual role, and replacing co-manufacturing with principal and secondary manufacturers.
- UK customers only. Limiting the Duty to retail business where the customer is in the UK, based on residential address or place of establishment.
- Distribution chains. Confirming firms are responsible for their own role, can take a proportionate approach to due diligence on other firms, and can generally rely on information from other firms in good faith.
- Board reporting. Confirming that a stand-alone Consumer Duty board report is not required and that reporting can be built into existing governance, focused on key insights, actions and risks.
- Further exclusions. Excluding certain wholesale-facing activities, such as merchant acquiring and safeguarding of funds for payments and e-money firms.
For most retail-facing firms these changes will reduce duplication rather than lower the standard. Firms that manufacture or distribute retail products will still need to evidence outcomes. Payments and e-money firms should read the proposals alongside the new safeguarding rules described in our guide to EMI and payment institution licences.
Risks and common mistakes
Most FCA Consumer Duty problems come from a gap between what a firm says and what its data shows. These are the mistakes we see most often.
Treating the Duty as a documentation exercise
Firms that responded to the Duty by producing policies, gap analyses and attestations often struggle when a supervisor asks for evidence of outcomes. Policies describe intentions; the FCA wants proof that customers are getting good results. The remedy is to start from the customer journey and the data available at each stage, then decide which metrics show whether the outcome is good. Documentation should explain the evidence, not replace it. Firms should also be able to show what changed in the business as a result of the Duty, because a firm that changed nothing will find it hard to argue it took the Duty seriously.
Fair value assessments that only look at averages
A product can represent fair value for the average customer while delivering poor value to a significant group, such as customers on legacy pricing or those who pay for features they cannot use. Fair value work should break results down by cohort, channel and tenure, consider all charges including those paid to third parties, and look at the benefits customers actually receive. Where some groups receive poor value, record what you have done about it. The FCA expects firms to act, not simply to note the issue in the next annual review.
Weak outcomes monitoring for vulnerable customers
Many firms have vulnerability policies and training but cannot show whether customers with characteristics of vulnerability achieve outcomes as good as other customers. The FCA's 2025 review highlighted this gap. Firms should identify vulnerability where it is relevant, record it appropriately under data protection law, and compare outcomes such as complaint resolution, arrears handling and cancellation journeys. An absence of complaints from vulnerable customers is not evidence that outcomes are good, and the FCA has said so expressly.
No evidence of board challenge
The FCA has criticised board reports that were approved without visible scrutiny. Board minutes should record the questions asked, the concerns raised and the actions agreed. Non-executive directors should be able to explain the main risks to customer outcomes. A board that simply notes the report risks giving the impression that the Duty is owned by compliance rather than by senior management. Under the Senior Managers and Certification Regime, accountability for the Duty should sit with a named senior manager, usually through a Consumer Duty champion on the board.
Ignoring the distribution chain
Manufacturers and distributors each need information from the other to assess outcomes. Many firms have not agreed what data will be shared, how often, or what happens if a partner fails to provide it. Contracts and service agreements should be updated to cover information-sharing. While the 2026 proposals would confirm that firms are responsible only for their own role, a firm that relies on another firm's information must still act reasonably and in good faith.
Supervision, enforcement and redress
The FCA uses a range of tools under the Duty, from portfolio letters and multi-firm reviews to individual supervisory requirements and enforcement. In practice, most issues are resolved through supervision, with firms agreeing to change products, pricing or communications and, where customers have suffered loss, to pay redress.
A Duty breach can also strengthen a customer complaint to the Financial Ombudsman Service. Ombudsman decisions are made on what is fair and reasonable, and the Duty forms part of the regulatory standards the Ombudsman takes into account. Firms should therefore expect their own outcomes evidence to be requested in complaint handling as well as by supervisors.
Where an investigation begins, early legal advice on privilege, document preservation and engagement strategy matters. Our FCA enforcement team advises firms on responding to supervisory reviews, skilled person reports and enforcement referrals, and our article on how to respond to an FCA investigation sets out the first steps.
Cross-border firms and groups
The FCA Consumer Duty applies to UK retail market business, including business carried on by overseas firms with UK permissions and by firms dealing with UK customers through UK branches. Groups headquartered elsewhere, including in the EU, the Gulf, Singapore or Bangladesh, often find that their global product governance frameworks do not produce the outcome data the FCA expects.
The FCA's proposal to limit the Duty to customers in the UK would help groups that serve non-UK customers from London, but it is not yet in force. Until the rules change, firms should check how the current territorial scope applies to their business and keep evidence for UK customers separate where possible. New entrants should build Duty evidence into their application from the start, as described in our guide to the FCA authorisation process.
What to do next: a Consumer Duty evidence checklist
As of October 2026, firms should use the period before any final 2027 rules to strengthen evidence rather than wait. A practical checklist:
- Confirm the products and services in scope and your role in each distribution chain.
- Set outcome metrics with tolerances for each of the four outcomes, including breakdowns for customers with characteristics of vulnerability.
- Refresh fair value assessments to analyse cohorts, legacy customers and all charges.
- Test key communications for understanding and record the results.
- Compare cancellation, switching and complaints journeys with sales journeys.
- Agree data-sharing arrangements with distribution partners.
- Prepare the board report around insights, actions and risks, with named owners and deadlines.
- Minute board challenge and record the board's conclusions on compliance and strategy.
- Assess whether any identified harm requires redress for past customers.
- Respond to final rules following CP26/23 once published, and update governance accordingly.
TRW & Co's London office is authorised and regulated by the Solicitors Regulation Authority. We advise firms on Consumer Duty implementation, board reporting, fair value reviews, distribution agreements and supervisory engagement, working with our consumer credit and payments teams where relevant. To discuss your firm's FCA Consumer Duty position, contact us at info@trw.co.
Frequently asked questions
01What is the FCA Consumer Duty in simple terms?
It is a set of FCA rules requiring firms that do retail financial services business to act to deliver good outcomes for customers. It has three parts: Principle 12, three cross-cutting rules (act in good faith, avoid foreseeable harm, and enable customers to pursue their financial objectives) and four outcomes covering products and services, price and value, consumer understanding and consumer support. Firms must monitor the outcomes customers actually receive, act where they fall short, and report annually to their board. It applies to manufacturers and distributors, even those without direct customer contact.
02When did the Consumer Duty come into force?
The Duty came into force on 31 July 2023 for products and services that were open to sale or renewal. It applied to closed products and services, meaning legacy products no longer sold, from 31 July 2024. Firms must produce a board report on customer outcomes at least annually, and most firms are now well into their second or third reporting cycle. As of October 2026, the FCA is consulting on refinements, with final rules expected in early 2027, but the existing rules continue to apply in full until then.
03What must a Consumer Duty board report contain?
The rules require a report to the governing body setting out the results of the firm's outcomes monitoring and any actions required as a result. The board must review and approve it at least annually, confirm whether the firm is complying with the Duty, and assess whether future strategy is consistent with it. The FCA's review found the best reports covered each of the four outcomes, used good-quality data, analysed outcomes for different customer groups, including vulnerable customers, and set out actions with owners and timescales. The 2026 proposals would confirm that a stand-alone report is not required.
04Does the Consumer Duty apply to small firms?
Yes. All firms carrying on retail market business are in scope, whatever their size, but the FCA expects a proportionate approach. In February 2026 it added guidance for smaller firms to its board report findings, suggesting that firms without formal committees use a knowledgeable critical friend, draw on external data such as Financial Ombudsman Service information and trade body benchmarking, and use qualitative feedback where MI is limited. Smaller firms still need clear accountability and evidence of good outcomes, but they do not need the elaborate structures of a large bank.
05How does the Duty affect vulnerable customers?
The Duty requires firms to consider the needs of customers with characteristics of vulnerability across all four outcomes. The FCA's guidance FG21/1 remains in place and its 2025 review found progress but continuing gaps, particularly in product design and outcomes monitoring. Firms should be able to show whether vulnerable customers receive outcomes as good as other customers, using data such as complaint outcomes and journey times. A policy and training programme alone is unlikely to satisfy the FCA without evidence of outcomes.
06What happens if a firm breaches the Consumer Duty?
The FCA can use supervisory tools such as requiring changes to products, pricing or communications, imposing requirements on a firm's permissions, appointing a skilled person, or taking enforcement action leading to fines or public censure. Where customers have suffered harm, firms are expected to put it right, which can mean redress exercises covering past customers. Customers can also complain to the Financial Ombudsman Service, which takes relevant regulatory standards into account when deciding what is fair and reasonable.
Sources and official materials
- FCA: Consumer Duty — The FCA's Consumer Duty hub with rules, guidance and reviews
- PS22/9: A new Consumer Duty — Final rules and guidance introducing the Duty
- FCA Handbook PRIN 2A.8: Governance and culture — Board report and governing body requirements
- Consumer Duty board reports: good practice and areas for improvement — FCA review of 180 firms' first board reports, updated February 2026
- Firms' treatment of customers in vulnerable circumstances: review — FCA multi-firm review published March 2025
- FG21/1: Guidance for firms on the fair treatment of vulnerable customers — FCA vulnerability guidance
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.