Key dates
- 31 July 2023
- – Consumer Duty (Principle 12 and PRIN 2A) applies to all new and existing in‑scope products and services open to new business for retail customers
- 31 July 2024
- – Consumer Duty applies to closed products and services (legacy books), extending the expectations on product design, monitoring and fair value to those products
Suggested considerations
- Review and update product governance frameworks to ensure they explicitly incorporate Consumer Duty outcomes, including structured consideration of customer needs, characteristics and objectives at every stage of product design and lifecycle.
- Define and document granular target markets for each retail product and service, clearly articulating which customer segments the product is designed for, and excluding groups for whom the product could cause foreseeable harm.
- Map products and services against vulnerable‑customer characteristics and update design, features, pricing and servicing models to mitigate risks and support good outcomes for vulnerable groups.
- Implement or enhance processes to collect comprehensive management information on consumer outcomes (complaints, customer feedback, usage patterns, lapse and cancellation data, arrears and forbearance metrics) for each product.
- Establish governance mechanisms to ensure that insights from monitoring and MI lead to timely, documented actions to improve products, pricing, communications or customer journeys where emerging risks or poor outcomes are identified.
What changed
- - FCA reinforces that product design must be explicitly based on evidenced consumer needs, characteristics and behaviours, rather than generic assumptions or internal commercial priorities.
- Firms are expected to define target markets at a granular level, avoiding broad or generic categories that mask differing needs or risks (especially for vulnerable customers).
- Product governance must be embedded into business‑as‑usual decision‑making with clear ownership, challenge and accountability, not treated as a one‑off Consumer Duty implementation project.
- Manufacturers and distributors must maintain robust, ongoing monitoring of consumer outcomes using a wide range of management information, including complaints, usage patterns, early cancellations...
- There must be a clear, demonstrable link between monitoring and remedial action; collecting data without acting on emerging risks is characterised as weak practice.
Compliance impact
Non‑compliance with these product‑design and governance expectations under Consumer Duty exposes firms to significant supervisory challenge, enforcement risk, potential redress exercises and reputational damage. FCA is signalling that weak product governance and failure to act on outcomes data will be treated as systemic conduct failings rather than isolated issues.