Consumer Duty has just passed its second birthday. How do we as an industry reflect on this regulation? Is Consumer Duty about to experience the terrible twos? Stuart O’Sullivan, Director, Protiviti UK, explores the key impacts so far, what advisors can expect next, as well as gives advisers practical steps to navigate the future.
Implemented in July 2023, Consumer Duty was heralded as the biggest change to consumer protection regulation for 20 years, with the aim of raising standards across the industry and ensuring that firms deliver good outcomes for retail customers. Now, two years into its implementation, it is an opportune moment to reflect on its impact so far and anticipate what we may can expect in the year ahead.
Two Years In: Key Impacts of the Consumer Duty
1. Enhanced Customer Outcomes
Two years after its introduction, one of the impacts of Consumer Duty is that firms now need to actively measure and demonstrate the customer outcomes they are delivering. The FCA has been assessing firms’ approaches towards this and taking action on historic inherent business model risks and issues, which has meant financial advisers and firms have needed to place the interests of their clients at the forefront of strategic decision-making, and confirm this in annual board reports. Some of this has translated into:
- Simplified Products and Services: Advisers have worked to ensure that financial products are easier to understand and align more closely with the needs of their target markets.
- Fair Value Assessments: Pricing structures are increasingly scrutinised to ensure they provide fair value, with hidden fees and opaque charges being eliminated.
2. Cultural Shifts Within Firms
The FCA intends for Consumer Duty to facilitate a cultural transformation, particularly for firms that previously operated under a less customer-focused ethos. Through the Rules and Finalised Guidance that make up Consumer Duty the FCA has specific areas to test firms against, some of which are new.For example, the concept of fair value assessments or price and value, as well as areas such as consumer understanding. Staff in firms with an embedded customer outcome mindset will have these factors front of mind. Having to demonstrate the delivery of good outcomes and being able to monitor this delivery on a continuous basis has brought a sharper focus to Boards and senior managers on the expectations of the FCA.
3. Increased Scrutiny from the FCA
The FCA has stepped up its supervisory activities, with a focus on identifying firms that fall short of the required standards. One thing that I reflect on is the amount of implementation and embedding activity there has been from the FCA. It is difficult to recall any other regulatory change and implementation that the FCA – or its predecessor the FSA – has been so active in setting expectations and reviewing early implementation. This approach has been helpful for many firms as has the amount of feedback that has resulted.
4. Operational Challenges
Despite the positive strides, the implementation of the Consumer Duty has not come without challenges. Smaller firms, in particular, have reported difficulties in meeting the regulatory requirements due to limited resources. Ensuring a proportionate approach to implementation based on a comprehensive understanding of the requirements has been helpful in some cases.
What Financial Advisers Can Expect next from Consumer Duty
As the Consumer Duty continues to evolve, financial advisers should prepare for further developments and challenges in the coming year. Here are some of the likely things to look out for:
1. Greater FCA Oversight and Data-Driven Monitoring
The FCA has indicated it will continue to intensify its oversight. In its 2025 Strategy refresh, it confirmed the greater use it will make of data to drive decision making and form views on firm’s behaviour. Firms can expect increased use of data analytics to monitor compliance, with the regulator likely to make use of technology to identify trends and outliers.
2. Continued Focus on Vulnerable Customers
The FCA published its views on the industry’s progress on Vulnerable Customers in March 2025. While this did not result in any changes to the current guidance, it remains high on the regulator’s agenda. In the next year, advisers will need to demonstrate that they are taking proactive steps to identify and support clients who may be at greater risk of harm, such as those with low financial literacy, health issues, or challenging personal circumstances.
3. Evolution of Technology and Digital Tools
Used in the right way, technology can play a pivotal role in helping advisers meet the demands of Consumer Duty. From automated compliance tools to digital platforms that enhance customer engagement, the adoption of innovative solutions is likely to accelerate. Advisers who embrace these technologies will be better positioned to meet regulatory expectations while improving client engagement, experience and journeys.
4. Increased Collaboration Across the Distribution Chain
Consumer Duty has placed greater responsibility on all firms within the distribution chain to share information about their clients, and the outcomes being delivered through the products and services they use. Over the next year, advisers can expect greater collaboration with product manufacturers and other intermediaries to ensure that products and services meet the required standards. This may involve joint reviews, information sharing, and coordinated efforts to address any gaps.
Preparing for the Future: Practical Steps for Advisers
To successfully navigate the Consumer Duty evolving landscape, advisers should consider the following steps:
- Review Current Practices: Outcomes monitoring approach continue to evolve and firms should look at their approaches and identify areas for improvement.
- Invest in Training: Equip staff with the knowledge and skills needed to deliver good customer outcomes based on your service offering.
- Leverage Technology: Explore tools that enhance client engagement and the client experience.
- Engage with Vulnerable Customers: Develop tailored strategies to identify and address the needs of clients based on their specific circumstances.
- Collaborate Proactively: Build strong relationships with other firms in the distribution chain to ensure alignment with regulatory expectations.
Two years into its implementation, the UK Consumer Duty has already made a significant impact on the financial services industry, driving improvements in customer outcomes and fostering a more customer-focused culture. As the regulation and regulator continues to evolve, financial advisers must remain vigilant, proactive, and adaptable to meet the challenges and opportunities that lie ahead. By prioritising compliance, leveraging technology, and maintaining a steadfast commitment to their clients’ best interests, advisers can thrive in this new era of heightened regulatory expectations.
About Stuart O’Sullivan
Stuart is an Associate Director working on engagements where his subject matter expertise is required. Stuart started his financial services career at the FSA where he worked in supervision and authorisation and he has 17 years’ experience as a regulatory consultant, 13 years with Huntswood and subsequently with Protiviti providing strategic advice and solutions to clients and senior managers operating in the UK industry.
Stuart O’Sullivan, Director, Protiviti UK
