FCA Consumer Duty Examples: What Good Looks Like in Practice

TL;DR — The Consumer Duty is principles-based, which means the regulator will not give you a checklist. The way to calibrate is by working through concrete examples across the four outcomes. Below are seven, drawn from BNPL, consumer credit, insurance, wealth and payments, with the evidence we would expect a firm to be able to produce on request.

Table of contents

• What the Duty actually requires
• Why "examples" is the right way to learn the Duty
• Example 1: BNPL late fee disclosure (Consumer Understanding)
• Example 2: Credit broker affordability journey (Products & Services)
• Example 3: Motor insurance renewal pricing (Price & Value)
• Example 4: Wealth platform sludge on closure (Consumer Support)
• Example 5: Savings account interest pass-through (Price & Value)
• Example 6: Crypto promotion risk warning (Consumer Understanding)
• Example 7: Vulnerable customer flag in collections (Consumer Support)
• The pattern across all seven
• FAQ

What the Duty actually requires

The Consumer Duty lives in PRIN 2A of the FCA Handbook and is fleshed out in FS22/5, the final guidance the FCA published in July 2022. It comprises:

• A Consumer Principle (Principle 12): firms must act to deliver good outcomes for retail customers.
• Three cross-cutting rules: act in good faith; avoid foreseeable harm; enable and support customers to pursue their financial objectives.
• Four outcomes: products and services; price and value; consumer understanding; consumer support.

The Duty applies to all firms in the retail distribution chain — manufacturers, distributors, intermediaries — even where there is no direct contractual relationship with the end customer. That last point catches more firms than expected, particularly platforms, introducer-appointed representatives and white-label payment providers.

Why "examples" is the right way to learn the Duty

The Duty is deliberately outcomes-focused. The FCA has resisted prescribing what "fair value" means or what counts as "reasonably understandable" communications. That puts a heavy burden on firms to evidence their reasoning. The most reliable way we have seen compliance teams build that muscle is by working through other firms' published examples — both the good ones in the FCA's portfolio reviews and the bad ones in enforcement.

For each example below, we describe the product context, the outcome under stress, the practical decision the firm had to make, and the evidence we would expect a Head of Compliance or SMF16 to put in their board pack.

Example 1: BNPL late fee disclosure

Outcome: Consumer Understanding (with adjacent Products & Services).

Context: A BNPL provider offers interest-free instalments on purchases up to £400. Late payment triggers a £6 fee per missed instalment, capped at £24. Pre-Duty, the fee was disclosed in the T&Cs and in a single line in the checkout flow.

Where the Duty bites: The cross-cutting rule on avoiding foreseeable harm requires the firm to consider whether the average customer in the target market — typically a sub-prime cohort using BNPL for budget-smoothing — would understand the fee exposure before committing. A single line buried in T&Cs is unlikely to clear that bar.

What good looks like: - Late fee prominently displayed adjacent to the "Confirm" button, in the same font size as the instalment amount. - A worked example ("If you miss all four instalments, you will pay £24 in fees on top of your £200 purchase") shown before checkout. - Comprehension testing on a representative sample of customers, with a target threshold (commonly 80%) for unaided recall of the fee structure. - An MI feed tracking the proportion of customers who incur late fees, segmented by acquisition channel and credit tier. If a particular channel produces disproportionate fee incidence, that is a Products & Services question, not a Consumer Understanding question.

For BNPL specifically, see our UDAAP examples for BNPL — the US analysis covers similar disclosure failures with directly transferable lessons.

Example 2: Credit broker affordability journey

Outcome: Products & Services.

Context: A consumer credit broker matches applicants to a panel of lenders. The broker earns a commission per funded loan, with the highest commission paid by the lender with the loosest affordability criteria.

Where the Duty bites: Distribution-chain firms must satisfy themselves that the product is designed for, and being distributed to, an appropriate target market. A broker steering toward the highest-commission lender, irrespective of fit, falls foul of both the good-faith cross-cutting rule and the Products & Services outcome. CONC 5.2A still applies in parallel; the Duty raises the bar.

What good looks like: - Documented panel governance, including how commission differentials are neutralised in the matching logic (or, if not neutralised, why that is justifiable). - A target-market statement for each lender on the panel, refreshed annually, with quantitative criteria (credit score band, income band, employment status). - Outcomes monitoring: default rates, complaints, and "first-payment-missed" rates by lender, with thresholds that trigger a review of panel inclusion. - An audit trail of customer-by-customer recommendations, including the reason a particular lender was chosen.

Example 3: Motor insurance renewal pricing

Outcome: Price and Value.

Context: A motor insurer renews policies with an automated uplift driven by a churn-prediction model. Long-tenured customers are systematically charged more than new customers for equivalent risk.

Where the Duty bites: This is the classic "price walking" pattern that the FCA addressed in PS21/5 (general insurance pricing practices), in force since January 2022. The Duty reinforces it: the price paid must be reasonable relative to the benefit, and firms must be able to evidence that for each cohort.

What good looks like: - A fair value assessment for the renewal book that segments customers by tenure, claim history and channel, and demonstrates that older customers are not paying systematically more than new ones for the same risk. Our Consumer Duty fair value assessment guide walks through the methodology in detail. - Documented governance over the renewal-pricing model, including who signs off on the model, how it is back-tested, and what happens when a cohort drifts. - Evidence retained on a per-renewal basis, not just an annual summary, because the FCA will sample. - A communication that, at renewal, shows the previous year's premium alongside the new one, as required by ICOBS 6.5.

Example 4: Wealth platform sludge on closure

Outcome: Consumer Support.

Context: A self-directed investment platform allows customers to open an account in three minutes online. Closure requires a wet-ink signature, a notarised ID copy, and a 10-business-day processing window.

Where the Duty bites: This is "sludge" — friction that is asymmetric between the firm's interest and the customer's interest. The FCA has named it explicitly in Dear CEO letters and in its 2024 portfolio review of platforms. Sludge breaches the cross-cutting rule on enabling customers to pursue their financial objectives.

What good looks like: - Parity of effort: closure no more onerous than opening, save for genuine prudential or anti-fraud requirements that can be evidenced. - A "switching journey" log that captures time-to-close, drop-off points, and customer complaints about closure friction. - A periodic test where compliance or internal audit attempts to close a test account end-to-end and records the experience. - For SIPP and ISA transfers specifically, performance against the industry-standard 10-day target, with explanations for any breach.

Example 5: Savings account interest pass-through

Outcome: Price and Value.

Context: A challenger bank passed through Bank of England base rate increases to its lending products within one business day but took, on average, 67 days to reflect equivalent changes in its instant-access savings rate.

Where the Duty bites: The FCA's [Verify with Reg Lookup] July 2023 "Cash Savings Market Review" called out exactly this asymmetry. The Duty requires that the value delivered to savings customers is reasonable relative to the cost of comparable products elsewhere in the market.

What good looks like: - A documented savings-rate-setting policy, with named accountable executives (typically the SMF1 or SMF2 alongside the SMF16). - A monthly benchmarking exercise against the top-quartile rate for equivalent products, with a justification recorded when the firm's rate falls below the benchmark. - An on-platform notification to existing customers when a better-rate product becomes available within the same firm, particularly for legacy or closed-book savers. - Quarterly board-level review of savings-pass-through, captured in the annual Consumer Duty board report. We cover the structure in our Consumer Duty board report template.

Example 6: Crypto promotion risk warning

Outcome: Consumer Understanding.

Context: An FCA-registered cryptoasset firm promotes a yield-bearing stablecoin product through paid social media. The promotion includes the prescribed risk warning, a personalised risk warning pop-up, and a 24-hour cooling-off period for first-time investors, in line with the financial promotions rules for cryptoassets in force since October 2023.

Where the Duty bites: Even where the firm complies with the letter of COBS 4.12A and the cryptoasset financial promotions regime, the Duty asks whether the average target customer would actually understand the nature of the risk. A prescribed risk warning that no one reads is still a Duty failure.

What good looks like: - Comprehension testing at onboarding — typically a short quiz on capital risk, liquidity and the absence of FSCS cover — with re-testing if the customer pauses for more than 90 days. - A bias toward live, dynamic disclosure (in-product callouts when the customer attempts a high-risk action) rather than static at-sign-up disclosure alone. - For an end-to-end checklist, see our crypto financial promotion checklist.

Example 7: Vulnerable customer flag in collections

Outcome: Consumer Support.

Context: A consumer credit lender's collections team receives a call from a customer who discloses a recent bereavement. The agent applies a standard 30-day hold but does not flag the customer as vulnerable on the file. Three months later the same customer is referred to an external DCA.

Where the Duty bites: FG21/1 on the fair treatment of vulnerable customers, layered with PRIN 2A, requires firms to identify, record and respond to vulnerability characteristics. A single 30-day hold is not a response.

What good looks like: - Real-time conversation monitoring (call and chat) for vulnerability cues — bereavement, mental health, addiction, financial difficulty — with automatic routing to a specialist team. Static post-hoc QA sampling will not catch enough. - A vulnerability flag on the customer record that follows the customer through downstream actions (no DCA referral while flag is active without a fresh review). - Outcome testing: a six-monthly review of complaints and Financial Ombudsman cases involving vulnerable customers, with root-cause categorisation.

The pattern across all seven

Look across the examples and a pattern emerges. Each one requires three things the FCA will ask for in a section 166 review:

1. A documented decision — what the firm decided was a fair outcome for this cohort, and why.
2. Evidence the decision is being implemented — usually a sample of customer interactions or transactions.
3. Outcomes data showing the decision is producing the intended result — complaints, drop-off rates, fee incidence, comprehension scores.

Most firms have (1). Many have (2) on a small sample. Very few have (3) at the granularity the Duty assumes. That is the gap to close before the next annual board attestation. The four-outcomes structure of the Consumer Duty board report template is built around exactly this evidence stack.

FAQ

What are the four Consumer Duty outcomes? Products and services; price and value; consumer understanding; consumer support. Each has its own outcome rules in PRIN 2A and is supported by FS22/5.

Does the Consumer Duty apply to B2B firms? Generally no — it applies to retail customers. But "retail" includes some SMEs and many sole traders, depending on the product. Check the perimeter in PRIN 2A.1.

When did the Consumer Duty come into force? 31 July 2023 for open products and services; 31 July 2024 for closed products. The first annual board attestation was due by 31 July 2024 for open products.

Is the Duty stricter than TCF? Yes. Treating Customers Fairly was a behavioural expectation; the Duty is a set of enforceable rules with explicit outcomes and a higher evidentiary bar.

Does the Duty replace COBS, CONC or ICOBS? No. It sits on top of them. Where there is a conflict, the higher standard applies. Most firms find the Duty is the higher standard in practice.

How does the FCA supervise the Duty? Through Dear CEO letters, multi-firm reviews, and section 166 skilled-person reviews. The FCA has signalled that thematic reviews of fair value and consumer support are now annual fixtures.

What is the personal accountability under SMCR? The SMF16 (Compliance) and SMF17 (MLRO) carry the operational accountability; the Consumer Duty Champion at board level holds the strategic accountability. The Duty does not create new SMFs but it does create new things they will be asked about.

Audit your customer communications against the Duty

If you read these seven examples and felt the gap between "we have a policy" and "we can evidence the outcome" widening, the first place to look is your customer-facing communications — sales scripts, chat transcripts, marketing copy, product disclosures. Sedric's free Marketing Comms Audit will take up to ten of your assets, score them against the Consumer Duty outcomes and the financial promotions rules, and return a written report with specific remediation suggestions. No sales call. Run a free comms audit.