Foreseeable harm

Category: Compliance & AML · Reviewed by Mark Fox, Broker · Renewals · Last reviewed June 2026

Harm that a reasonable firm could be expected to anticipate at the point of design, sale or service — the absence of which is one of the three cross-cutting standards under the Consumer Duty.

Definition

Foreseeable harm is harm that a firm, exercising reasonable care and skill, could anticipate. It includes harm not yet materialised but that may reasonably be predicted from the design of a product, the way it is sold, the conduct of the service, or the way a customer is treated at any stage. The Consumer Duty requires firms to take all reasonable steps to avoid foreseeable harm.

Legal / Regulatory basis

FCA Handbook, PRIN 2A.2.7R (cross-cutting rule). FCA Policy Statement PS22/9 and Finalised Guidance FG22/5 expand on the concept and its application.

How it works in practice

The test is anticipatory — firms cannot wait for actual harm to occur. They must identify what could go wrong in light of the customer base, the product, the journey, and the market context. Risk indicators include product complexity, customer vulnerability, mismatched expectations, costly add-ons, opaque pricing, friction in cancellation or switching, inadequate disclosure, and emerging issues identified through MI or complaints data. Mitigations follow — redesign, additional disclosure, enhanced training, vulnerability flags, or product withdrawal.

Common variations

Foreseeable harm is read with vulnerability considerations — what is foreseeable for a typical customer may be heightened or different for a vulnerable customer. The standard is reasonableness — not perfection — but firms are expected to take a forward-looking and proactive approach.

Example

A product that requires the customer to make annual proactive contact to maintain a discount is foreseeably harmful if the firm does not provide clear, accessible reminders. Apex’s renewal-journey design considers whether the customer’s mid-term life events (relocation, change of vehicle, redundancy) could foreseeably leave them under- or over-insured, and what proactive intervention is reasonable.

See also

• Cross-cutting rules
• Four Consumer Duty outcomes
• Vulnerable customers
• PRIN 2A — The Consumer Duty

References

FCA Handbook, PRIN 2A.2.7R. FCA Policy Statement PS22/9. FCA Finalised Guidance FG22/5.

Last reviewed

By Matt Bartlett, Director, on 2026-06-11.

This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.