Understanding the UK's New Consumer Duty Rules for Banks
What Is Consumer Duty?
The FCA's Consumer Duty rules came into force in July 2023, representing the most significant shift in UK financial regulation in a generation. They require banks and all other regulated financial firms to act to deliver good outcomes for retail customers — not merely to avoid technical rule breaches.
The Four Consumer Outcomes
Consumer Duty requires firms to demonstrate they're achieving four specific outcomes for their customers:
- Products and services: Products must be designed for a specific target market and actually meet that market's needs
- Price and value: Products must offer fair value — not just technically legal pricing, but genuinely good value relative to what the customer receives
- Consumer understanding: Communications must be clear, not misleading, and enable customers to make informed decisions
- Consumer support: Customers must be able to get help when they need it, with support matching the product's complexity
What This Means in Practice
Banks have had to review their entire product ranges — identifying customers who may be in products no longer suited to them, simplifying complex fee structures, and improving the accessibility of their complaints and support processes.
In practice: bonus rate savings accounts with sudden drops to near-zero rates, automatic rollover onto worse mortgage rates without communication, and excessive call centre waiting times are all now in the FCA's Consumer Duty crosshairs.
Consumer Benefits
Banks must now proactively identify customers in "foreseeable harm" — people in high-cost overdrafts who would benefit from a different product, or savings accounts with rates far below the market. Proactive communication, rather than passive availability of information, is now expected.
