What is the Consumer Duty?

The Consumer Duty is a set of FCA rules — found in the part of the FCA Handbook called PRIN 2A — that came into force on 31 July 2023. At its heart is a single, demanding idea: firms must act to deliver good outcomes for retail customers. Not just avoid treating them badly — actively work to get them good outcomes.

It replaced the older, softer "Treating Customers Fairly" approach with a higher standard and sharper teeth. The FCA has made clear it expects firms to be able to show they're delivering good outcomes, and it has been actively reviewing how firms across consumer credit — including credit brokers — are applying the Duty.

Does it apply to my business?

If you're FCA-authorised (or applying to be) and you offer finance to ordinary consumers, then yes. The Duty applies right across the "distribution chain" — everyone involved in getting a financial product to the end customer. As a business that introduces customers to a lender, you sit in that chain as a distributor, and the Duty's distributor obligations apply to you.

Importantly, this is true even if you hold the simpler limited permission, and even if you never lend a penny of your own money. Being the business that arranges or introduces the finance is enough to bring you within scope. What changes with size is not whether the Duty applies, but how much is proportionate — a small dealership isn't expected to do what a national lender does.

The Consumer Principle and the three cross-cutting rules

The Duty is built on one overarching principle — "a firm must act to deliver good outcomes for retail customers" — supported by three cross-cutting rules that should run through everything you do:

  • Act in good faith toward customers — honest, fair, and open dealing.
  • Avoid causing foreseeable harm — don't do (or fail to do) things that you could reasonably see would hurt customers.
  • Enable and support customers to pursue their financial objectives — help them make good decisions, rather than getting in the way.

The four outcomes — what they mean if you offer finance

Underneath the principle sit four "outcomes" the FCA wants firms to deliver. Here's what each one means in practice for a business that offers customers finance.

1. Products and services

The finance you offer should be suitable for the customers you serve. In practice that means working with reputable lenders, and only offering finance products that fit your typical customers — not pushing a product simply because it's the one your provider promotes.

2. Price and value

Customers should get fair value — a reasonable relationship between what they pay and what they get. For a credit broker, this is where commission comes into focus: you need to be alive to how any commission you earn affects the value to the customer, and you should never steer customers toward worse-value finance just because it pays you more. This has been a particular area of FCA and legal attention in motor finance.

3. Consumer understanding

Customers should be given clear, timely information so they actually understand what they're signing up to — the cost, the key terms, and any commission you receive. This connects directly to the financial-promotions rules: communications must be fair, clear and not misleading, and pitched so a typical customer can understand them.

4. Consumer support

It should be as easy for a customer to get help, ask a question, or complain as it was to take out the finance in the first place — no unreasonable barriers. Customers in vulnerable circumstances should get the extra care they need to achieve outcomes as good as anyone else's.

The Duty is not a one-off box-tick. It's an ongoing expectation: the FCA wants firms to keep an eye on the outcomes they're actually delivering, and to act when something isn't working for customers.

What this means in practice for a smaller firm

If you're a dealership, clinic, retailer or installer offering finance as a secondary activity, the Duty doesn't require a big compliance department. Applied proportionately, it means you should:

  • Understand the four outcomes and make sure how you offer finance reflects them;
  • Present finance fairly and disclose any commission clearly and in good time;
  • Recognise and support customers in vulnerable circumstances;
  • Make it easy to ask questions or complain, and handle complaints properly;
  • Keep an eye on outcomes — for example through the complaints you receive and occasional file checks — and fix problems you find;
  • Keep simple records that show you've thought about all of this.

How the Consumer Duty fits with getting authorised

When you apply to the FCA for authorisation, your application needs to show you understand and will meet your obligations — and the Consumer Duty is central to that. A credible application includes policies covering how you deliver good customer outcomes, treat customers fairly, present financial promotions, support vulnerable customers, and handle complaints. These are exactly the documents the FCA expects a well-run firm to have.

If you're working out the bigger picture first, our step-by-step guide to getting authorised covers the whole process, and limited permission vs full permission explains which route applies to you. Not sure whether you need authorisation at all? What is credit broking? is the place to start.