Consumer duty compliance remains at the heart of your regulatory obligations, more than a year on from the final implementation for closed products in July 2024.
Having already revisited our analysis of the FCA’s paradigm shift: Consumer Duty, you now face the challenge of embedding continuous‑improvement processes across both open and closed product lines to satisfy the FCA’s forward‑looking assessment. Whether you need to refine your governance frameworks, address legacy data gaps or demonstrate ongoing fair value to your customers, our financial services solicitors can deliver tailored implementation plans, gap‑analysis reports and hands‑on training, ensuring you not only meet but exceed the FCA’s higher standards.
Contents:
Who are ‘retail customers’?
The ‘retail customer’ definition aligns broadly with the scope of the FCA Handbook or relevant regulations in each sector. For example:
- For consumer credit, the Duty applies to all regulated credit-related activities.
- For deposit-taking activities, the Duty applies to consumers, micro-enterprises, charities with a turnover of less than £1 million and a natural person acting in a capacity as a trustee if acting for purposes outside their trade, business or profession (in line with the ‘banking customer’ test in the Banking Conduct of Business Sourcebook (BCOBS)); and
- For payment service or e-money providers, the Duty applies to business conducted with consumers, micro-enterprises and small charities (where the definitions of these terms are the same as for deposit takers, as noted above).
Consumer Duty compliance timeline
Implementing the principles of Consumer Duty proceeded on a phased basis, as recognised by the FCA, acknowledging the complexity of embedding these principles. The first phase, which applies to open products and services, took effect on 31 July 2023, while the second phase, covering closed products and services, took effect on 31 July 2024.
The FCA has consistently reinforced that Consumer Duty is “Not just once and done.” While firms were required to implement their principles by the respective deadlines, ongoing work remains essential. Businesses must continually review, refine, and enhance their approach to ensure full compliance and ongoing improvement in customer outcomes.
Additionally, following an FCA announcement on 27 February 2025, you are no longer required to appoint a Consumer Duty champion - a role initially designed to ensure senior executive oversight of compliance with the new standards. Moving forward, the FCA has emphasised that you should focus on integrating Consumer Duty principles into your core governance structures to sustain compliance and best practices.
Distinguishing between open products and services and closed products and services
Open products and services refer to new and existing products that were manufactured, marketed, or distributed to retail customers before 31 July 2023 and have remained available for sale or renewal beyond that date.
Closed products and services are those that were no longer marketed or distributed to retail customers on or after July 31, 2023, and are not open for renewal.
Final phase: closed products and services
With the initial implementation of Consumer Duty now complete across both open and closed products, you may have encountered unique challenges in this final phase for closed products. Unlike open products, you may have found that some historical product information required for the product's initial manufacture was unavailable, for example, or where past product designs didn’t consider the level of detail now required under the Duty.
To comply with the Consumer Duty, you needed to develop a robust and achievable implementation plan. The core steps in this process included:
- Scoping: You likely built on the work already done for open products to assess what fell within the scope of closed products. This approach helped ensure consistency across your firm’s compliance efforts.
- Reviewing: You needed to develop a process to review products and services to ensure they continue to offer fair value. This involved analysing key factors such as the target market, distribution strategy, pricing, product complexity, and any historical complaints or known issues.
Instead of reviewing each product and service individually, the FCA recommended aligning the treatment of similar products, i.e. those designed to meet the exact customer needs and serve a similar customer base.
Additionally, the FCA advised prioritising the review of products or services that posed a higher risk of consumer harm, particularly those that received complaints about pricing and value. - Strategy for product treatment: Once you have identified risks, implement mitigation strategies. This could involve improving a product or service to bring it into compliance or, in some cases, discontinuing it altogether. A gap analysis often helped inform these decisions, weighing factors such as cost implications and the impact on existing customers.
Ultimately, the FCA expected you to justify your decisions, demonstrate how they delivered good consumer outcomes, and take further action if necessary.
Is the Consumer Duty retrospective?
Consumer duty compliance is explicitly forward‑looking and does not impose retrospective obligations on your firm. The FCA has confirmed that it will not judge you with the benefit of hindsight, so historic product designs or past decisions will not be unwound solely because they predate the Duty. Instead, the Duty applies to both open and closed products and services on a forward‑looking basis, meaning your conduct from now on will be assessed against the standards in place at each point in time. For more details on the FCA’s forward‑looking assessment approach, see the FCA’s Consumer Duty guidance.
Looking ahead
Maintaining Consumer Duty compliance isn’t a box‑ticking exercise but an ongoing commitment to embedding higher standards, from product governance to customer communications. To stay ahead of evolving FCA expectations and demonstrate that your closed products continue to deliver good value, you need a partner who understands both the regulatory detail and the practical challenges of legacy portfolios. Our financial services solicitors can provide tailored review plans, gap‑analysis reports and strategic advice on remediation or product withdrawal, helping you evidence your decisions and safeguard your firm’s reputation under the FCA’s forward‑looking assessment.
