The Consumer Duty is the most significant change to conduct regulation the Financial Conduct Authority has introduced in a generation. It sits in the FCA Handbook at PRIN 2A and is anchored by Principle 12, which requires a firm to act to deliver good outcomes for retail customers. For regulated professional firms — independent financial advisers, mortgage intermediaries, insurance brokers, platforms — the Duty reshapes how services are designed, priced, communicated and supported. For unregulated professions whose PI insurers sit inside the FCA perimeter — solicitors, accountants, architects, surveyors and engineers — the Duty reaches through the insurer and reshapes wording, notification handling and complaints treatment.
This page explains what PRIN 2A requires, who it catches directly, who feels it indirectly, and what it means for professional indemnity cover.
The Consumer Duty is a package of rules and guidance set out in policy statement PS22/9 and codified in the Handbook at PRIN 2A. It came into force for open products and services on 31 July 2023 and was extended to closed products and services on 31 July 2024. The Duty applies to firms carrying on regulated activity for retail customers in the United Kingdom.
At its centre is Principle 12: a firm must act to deliver good outcomes for retail customers. Principle 12 replaces Principles 6 and 7 for firms in scope of the Duty. PRIN 2A then sets out the three cross-cutting rules that describe how firms must behave and the four outcomes that describe what firms must deliver.
The Duty is outcomes-focused rather than prescriptive. Rather than adding a single new box to tick, it asks firms to evidence, on a continuing basis, that they understand their customers, that the products and services they distribute are fit for purpose, that price reflects value, that communications support informed decision-making, and that customer support does not obstruct customers from acting in their own interests.
Products and services (PRIN 2A.3). Products and services must be designed to meet the needs, characteristics and objectives of an identified target market. Firms in the distribution chain must understand that target market and only distribute products to customers whose needs, characteristics and objectives match it. For an intermediary, that means a documented client segmentation, a target-market rationale for each product recommended, and evidence of ongoing product oversight.
Price and value (PRIN 2A.4). The price a retail customer pays must be reasonable relative to the benefits they receive. Firms must carry out — and be able to evidence — a fair-value assessment that considers total cost (fees, commissions, non-financial costs), the nature and quality of the product, comparable market alternatives and the characteristics of the target market. Distributors do their own value assessment on top of the manufacturer's.
Consumer understanding (PRIN 2A.5). Communications must equip retail customers to make effective, timely and properly informed decisions. That covers timing, content, medium and channel. Firms are expected to test communications and to tailor them where the target market or an individual customer's circumstances (including vulnerability) warrant it.
Consumer support (PRIN 2A.6). Support must enable retail customers to realise the benefits of the products and services they hold, act in their interests without unreasonable barriers and pursue the financial objectives they set. The rule bites on friction as much as on staffing: unreasonable barriers to switching, to cancellation, to complaint or to claim are inconsistent with the Duty.
PRIN 2A.2 sets three cross-cutting rules that apply across the four outcomes. They require firms to:
Good faith is defined in the Handbook as a standard of conduct characterised by honesty, fair and open dealing and consistency with the reasonable expectations of retail customers. Foreseeable harm is not restricted to harm the firm intended or actively caused — it captures harm the firm could reasonably have anticipated. Enabling retail customers to pursue their financial objectives is the positive obligation that pairs with the negative obligation to avoid harm.
PRIN 2A applies to firms carrying on a regulated activity where the customer is a retail customer for the purposes of the sectoral sourcebook. In practice, that includes:
The definition of retail customer varies by sourcebook. Under ICOBS, for example, a retail customer is broadly a consumer, but small commercial customers can also fall inside PRIN 2A where the sourcebook treats them as retail. Firms should map their client book against the sourcebook applicable to each regulated activity rather than assume a single perimeter across the business.
Many regulated professionals do not sit inside the FCA perimeter. Solicitors are regulated by the Solicitors Regulation Authority in England and Wales and by the Law Societies in Scotland and Northern Ireland. Accountants are regulated by ICAEW, ACCA, ICAS or CAI. Architects are regulated by the Architects Registration Board. Surveyors are regulated by RICS. Engineers are regulated by the Engineering Council and its licensed institutions. None of those firms are directly bound by PRIN 2A.
Their professional indemnity insurers are. Every FCA-authorised insurer manufacturing a PI product for a professional firm operates under PRIN 2A when the underlying protected consumer is retail — for example, the residential conveyancing client, the personal-tax return customer, the homeowner commissioning a survey. That reach affects the professional firm in three ways:
PRIN 2A does not repeal existing sectoral rules. It sits on top of them and cuts across them. Four interactions matter most for regulated professionals:
COBS 9 (suitability). For IFAs, PRIN 2A raises the bar on how suitability is evidenced. Documented target-market matching, fair-value analysis and consumer-understanding checks now sit alongside the traditional suitability assessment. A file that discharges COBS 9 but fails PRIN 2A is a file at risk.
MCOB. For mortgage intermediaries, MCOB continues to apply. PRIN 2A layers on price-and-value assessments across procuration fees, broker fees and cross-sold protection products. Consumer support obligations bear on affordability communications and on handling clients heading into arrears.
ICOBS 5-8. Insurance intermediaries continue to owe demands-and-needs, IPID and post-sale duties under ICOBS. PRIN 2A adds fair-value and consumer-support layers on top. Broker fees, add-on commissions and premium finance are three areas where fair-value scrutiny has landed hardest since 2023.
PROD. The Product Intervention and Product Governance sourcebook already requires target-market identification and distribution strategy. PRIN 2A raises the standard by requiring outcomes evidence — not just process — and by giving distributors an active role in feeding market-monitoring information back to manufacturers.
Consumer Duty has a direct bearing on the PI risk profile of every FCA-authorised professional firm.
Increased regulatory scrutiny raises PI exposure. The FCA has committed to using its supervisory tools — data requests, thematic reviews, section 166 skilled-persons reports — to test outcomes. Where a firm cannot evidence PRIN 2A compliance, the risk of enforcement, of past-business review requirements, and of an uptick in Financial Ombudsman Service referrals rises. PI wordings that exclude regulatory investigations, or that limit defence costs for regulatory work, expose firms at exactly the point they need cover.
Notification handling under Consumer Duty affects claims mechanics. Insurers' cross-cutting obligations bite on how notifications are treated. Firms should read their PI wording for the notification clause, the definition of circumstance, and any bar on the insurer denying cover for prejudicial delay where the delay itself was foreseeable to the insurer.
Vulnerable customer handling. FG21/1 — the FCA's finalised guidance on the fair treatment of vulnerable customers, published in February 2021 — is the reference document for how vulnerability sits inside the Duty. Firms are expected to identify vulnerability, adjust the customer journey and record what they did. Complaints that hinge on vulnerability recognition are one of the areas where the FOS has been most active.
Fair-value assessments require a documented rationale. The evidence base for a fair-value assessment — the components considered, the comparable market data used, the target-market analysis relied upon — is a working document. It is also, in a claim or a dispute, discoverable. Firms should treat the assessment as a piece of professional work product with the same rigour as advice files.
Since 31 July 2023 the FCA has published good-practice and areas-for-improvement material, has run thematic work on price and value and on outcomes monitoring, and has been explicit that supervisory activity is data-driven. Skilled-persons reports under section 166 of the Financial Services and Markets Act 2000 have been commissioned where firms have been unable to evidence outcomes. FOS decision volumes referencing Consumer Duty have grown as claims that turn on foreseeable harm or on unreasonable barriers to support work through the pipeline.
The direction of travel is clear: outcomes evidence, not process documentation, is what counts. Firms whose PRIN 2A files consist of policies and templates but no monitoring data, no outcomes reporting and no board-level challenge are at greater risk than firms whose files are thinner but whose evidence base is real.
The practical checklist for a regulated firm looks like this:
Senior managers under the Senior Managers and Certification Regime should expect Consumer Duty to feature in their statement of responsibilities and in any regulatory reference given on departure.
Apex Insurance Brokers Limited is authorised and regulated by the FCA under firm reference number 724952. Matt Bartlett is the controlling director and holds SMF3 (Executive Director), SMF16 (Compliance Oversight) and SMF17 (MLRO) approvals.
For regulated professional firms — IFAs, mortgage intermediaries, insurance brokers, platforms — Apex arranges professional indemnity cover with an eye on how PRIN 2A shapes the risk. That means reviewing the notification clause for late-circumstance and prejudicial-delay language, checking regulatory investigation cover, considering aggregation across advice files that share a common driver (a product, a market event, a piece of technology), and documenting the target-market and fair-value trail on the placement itself.
For unregulated professionals whose PI insurers are FCA-authorised, Apex reads the wording changes insurers roll out in response to their own Consumer Duty obligations and flags them at renewal. Named-broker service means the firm speaks to the same person on placement and at claim; accountable service means the reasoning behind a wording recommendation is on the file.
Consumer Duty is the FCA's package of rules and guidance codified in PRIN 2A of the FCA Handbook, anchored by Principle 12 (a firm must act to deliver good outcomes for retail customers). It came into force on 31 July 2023 for open products and services and was extended to closed products and services on 31 July 2024. The final rules were published in policy statement PS22/9 in July 2022.
PRIN 2A does not apply directly to firms outside the FCA perimeter. Solicitors, accountants, architects, surveyors and engineers are regulated by their own bodies — the SRA, ICAEW/ACCA/ICAS/CAI, the ARB, RICS and the Engineering Council respectively — not by the FCA. However, the professional indemnity insurers those firms buy from are FCA-authorised. Insurers' Consumer Duty obligations affect how they draft wordings, how they handle notifications and how they treat complaints, and those changes reach the professional firm at renewal and at claim.
Three ways. First, regulatory scrutiny on FCA-authorised professionals has risen, which raises the PI exposure and puts weight on how the wording covers regulatory investigations and defence costs. Second, insurers' own Consumer Duty obligations are pushing wordings towards clearer notification clauses and cleaner exclusions. Third, insurers' obligations bear on their notification and complaints handling — professional firms whose clients complain about insurer conduct have a regulatory expectation to reference.
Products and services (PRIN 2A.3), price and value (PRIN 2A.4), consumer understanding (PRIN 2A.5) and consumer support (PRIN 2A.6). Each outcome describes something the firm must deliver, not merely a process it must run. Firms are expected to evidence delivery through outcomes monitoring data, not through policy documents alone.
PRIN 2A.2 requires firms to act in good faith towards retail customers, avoid causing foreseeable harm to retail customers, and enable and support retail customers to pursue their financial objectives. The cross-cutting rules apply across all four outcomes and set the behavioural standard that underpins Principle 12.
Consumer Duty applied first to open products and services from 31 July 2023 — anything marketed, distributed or renewed on or after that date. It was extended to closed products and services from 31 July 2024. A closed product is one that has not been marketed, distributed or renewed on or after 31 July 2023. The Duty applies to the ongoing actions of firms in relation to closed books from 31 July 2024, not to past conduct.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952.