The Consumer Duty is the higher standard of consumer protection introduced by the Financial Conduct Authority in Policy Statement PS22/9 (July 2022) and codified in the Handbook at PRIN 2A. It came into force on 31 July 2023 for open products and services, and on 31 July 2024 for closed-book products. It sits on top of existing insurance conduct rules — it does not replace ICOBS or COBS — and requires firms to act to deliver good outcomes for retail customers. For insurance brokers, that reframes a familiar activity: the question is no longer whether a policy has been sold in line with the rules, but whether the customer has actually received a good outcome.
The Duty applies to retail customers. In insurance broking that means consumers and, importantly, many small businesses that fall within the FCA's definition of a micro-enterprise — broadly, fewer than 10 employees and turnover or balance sheet under €2 million. A large proportion of the professional indemnity book Apex writes falls inside that perimeter. Where a client is a larger commercial customer outside the retail definition, the Duty does not apply directly, but PRIN 1 to 12 and ICOBS still do.
Three obligations sit across everything a broker does. A firm must act in good faith toward retail customers; avoid causing foreseeable harm; and enable and support customers to pursue their financial objectives. Good faith is more than honesty — it is a standard of open, fair dealing consistent with the customer's reasonable expectations. Foreseeable harm captures loss the broker could reasonably anticipate, whether from a poor product recommendation, a confusing communication, or a barrier to claiming.
PRIN 2A then sets four outcomes the broker must deliver against.
Products and services (PRIN 2A.3). Every product distributed must be designed to meet the needs of an identified target market. As distributor, the broker owns a target-market assessment for its own broking service and must assess whether each product it recommends is consistent with the manufacturer's target market.
Price and value (PRIN 2A.4). Products and services must offer fair value — a reasonable relationship between the total price the customer pays and the benefits received. The broker must assess fair value on the broking service itself (the fee or commission earned) and on each policy recommended.
Consumer understanding (PRIN 2A.5). Communications must equip customers to make informed decisions. Plain English, timely, and — where the audience or product warrants it — tested for comprehension.
Consumer support (PRIN 2A.6). Support must be as accessible as the sale. No sludge practices, no unreasonable barriers to a mid-term adjustment, a claim, or a complaint.
Firms are expected to appoint a Consumer Duty Champion at board or senior-manager level, produce fair value assessments on each product line at least annually, and maintain customer-outcomes management information that a Board can actually interrogate. Vulnerable customers must be identified and supported in line with FG21/1; the Duty makes that expectation sharper, not softer.
Worked example (illustrative only). A broker recommends renewal on an incumbent insurer's professional indemnity policy for a five-partner accountancy firm. Consumer Duty adds four checks to the file. Target-market fit: is the product designed for accountancy firms of this size and risk profile, and does the manufacturer's target-market statement confirm it? Fair value: is the premium reasonable relative to the limit, retroactive date, aggregate structure and any run-off features — and is the broker's commission or fee proportionate to the work done? Consumer understanding: does the client understand claims-made cover, the notification trigger, and the meaning of “civil liability” wording, or has the broker relied on jargon? Consumer support: can the client reach the broker for a mid-term change or notification without friction, and are the claims and complaints routes clearly signposted? If any of these fails, the broker must either reconsider the recommendation, adjust the communication, or in the last resort decline to place the risk on those terms.
Related sector guides at Apex: solicitors PI, architects PI, IFAs PI, and accountants PI. For vulnerability, see FG21/1.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.