Introduction
If you've renewed an insurance policy, made a claim, or tried to cancel cover in the last couple of years, you may have noticed insurers and brokers talking more about "fair value," "vulnerable customers" and "good outcomes." This isn't marketing language. It reflects a specific FCA rule called the Consumer Duty, which now sits behind how every UK-regulated insurer and broker is expected to design, price, sell and support the products you buy.
Despite affecting nearly every retail insurance product in the UK, the Consumer Duty is rarely explained in plain terms to the people it's actually meant to protect. This guide sets out what the FCA currently requires, distinguishes it clearly from other insurance protections such as the price-walking rules and FSCS compensation, and is equally clear about what it does not mean for you as a policyholder. It complements our guides on FCA price-walking rules and FSCS protection, which cover related but distinct areas of insurance regulation.
Key Terms Explained
- Consumer Duty
- FCA rules requiring regulated firms to act to deliver good outcomes for retail customers, introduced through Policy Statement PS22-9.
- Retail Customer
- Broadly, an individual consumer buying a product for personal use, as opposed to a large commercial customer negotiating bespoke cover.
- Fair Value
- The relationship between the price a customer pays and the benefits they can reasonably expect to receive from a product.
- Cross-Cutting Rules
- Three overarching obligations that inform how firms should interpret and apply the four outcomes in practice.
- Financial Ombudsman Service (FOS)
- The independent body that resolves unresolved complaints between consumers and financial services firms, including insurers.
- Private Right of Action
- A legal mechanism that would let a consumer sue a firm directly in court for breaching a specific rule; the FCA has not introduced one for the Consumer Duty.
What Is the Consumer Duty?
The Consumer Duty is a set of FCA rules and guidance, finalised in July 2022 through Policy Statement PS22-9, that sets a higher standard of care for how regulated firms, including insurers and insurance intermediaries, treat retail customers. Rather than being a narrow rule about a single product feature, it's built around one overarching principle, three cross-cutting rules, and four detailed outcomes that apply across the entire customer relationship.
The Consumer Principle
At its core sits a single consumer principle: a firm must act to deliver good outcomes for retail customers. Every other part of the Duty exists to give that principle practical shape, telling firms what "good outcomes" actually means in areas like pricing, communication and ongoing support.
When It Took Effect
The Duty applied from 31 July 2023 to new products and services, and to existing products and services that remained open to sale or renewal. A later deadline of 31 July 2024 applied to closed products and services, meaning products no longer being marketed, distributed or renewed since July 2023. The FCA has been clear that the Duty is not applied retrospectively to actions taken before these dates, but does apply to any relevant action a firm takes from that point onward.
A Shift From Compliance Checklists to Outcomes
A key feature of the Duty is that it's outcomes-based rather than a fixed checklist. Firms are expected to demonstrate that customers are actually getting good outcomes in practice, evidenced through monitoring and review, rather than simply being able to show they followed a set process.
Who and What It Applies To
The Consumer Duty applies broadly across financial services, but its practical application to insurance follows the existing regulatory framework for general insurance and pure protection products.
General Insurance and Pure Protection
Non-investment insurance products, meaning general insurance such as car, home and travel cover, and pure protection products such as term life or income protection, fall within scope where they're sold to retail customers, following the existing regulatory scope set out in ICOBS, the FCA's Insurance Conduct of Business Sourcebook.
What Falls Outside Scope
The Duty does not apply to reinsurance, to contracts of large risk sold to commercial customers, or to other contracts of large risk where the insured risk is located outside the UK. It also does not apply to activities connected with distributing group insurance policies to new members, and fully bespoke non-investment insurance contracts, individually negotiated and tailored specifically to one customer's needs beyond a firm's standard products, are excluded as well.
Legacy Products
Legacy general insurance and pure protection products, along with certain funeral plans that already existed before the relevant rules came into force, can still fall within scope, which is part of why the closed-book deadline of 31 July 2024 mattered for insurers reviewing older, no-longer-marketed policies.
If you're unsure whether a specific policy is covered, this isn't something you need to work out yourself. Firms are responsible for assessing their own scope, and if you have concerns about a policy, raising them directly with the insurer or broker is the appropriate first step.
The Three Cross-Cutting Rules
Underneath the consumer principle, the FCA sets out three cross-cutting rules that explain how firms should act to deliver good outcomes. These rules apply across every area of a firm's conduct and are used to interpret the four outcomes described in the next section.
1. Act in Good Faith Towards Customers
Firms are expected to treat customers honestly and fairly, rather than approaching the relationship in a purely transactional or adversarial way.
2. Avoid Causing Foreseeable Harm
Firms are expected to identify risks to customers and take steps to mitigate them before they cause harm, rather than waiting for problems to surface through complaints.
3. Enable and Support Customers to Pursue Their Financial Objectives
Firms are expected to give customers clear information and effective support so they can make decisions and act on them, whether that means switching provider, making a claim or understanding what a policy actually covers.
The Four Outcomes Explained
The FCA's four outcomes represent the key elements of the relationship between a firm and its customers, from how a product is designed through to how a customer is supported once they hold it.
Outcome 1: Products and Services
Firms are expected to ensure that products and services are sold to customers whose needs, characteristics and objectives they actually meet. In practice, this means insurers should be able to show that a policy's target market is clearly defined, that the product is suitable for that market, and that it continues to be monitored to confirm it still meets customer needs over time.
Outcome 2: Price and Value
This is the outcome most directly relevant to what you pay. Firms must ensure the price a customer pays is reasonable relative to the benefits they receive, referred to as fair value. This involves ongoing fair value assessments covering fees, charges, limitations and non-financial costs, not just the headline premium.
Outcome 3: Consumer Understanding
Firms are expected to give customers information that's clear, timely and free of unnecessary jargon, tailored to the customer's level of understanding, and to test whether key information has actually been understood rather than assuming it has.
Outcome 4: Consumer Support
Firms must provide a level of ongoing support that allows customers to realise the benefits of what they've bought, throughout the lifecycle of the product. This includes not putting up unreasonable barriers when a customer wants to make a claim, switch provider or cancel a policy, and making sure customer service is as accessible as the original sales process.
What It Means for Insurers and Intermediaries
For firms, the Consumer Duty represents a shift in both expectation and evidence. Insurers and brokers are expected to build fair value frameworks, monitor outcomes on an ongoing basis, and be able to demonstrate, not just assert, that customers are getting good outcomes.
Fair Value Assessments Are Now Embedded, Not One-Off
Rather than a single sign-off at launch, firms are expected to keep reviewing whether a product continues to offer fair value as circumstances change, including reviewing pricing and fees against the benefits, limitations and non-financial costs customers actually experience.
Proportionality for Smaller Firms
The FCA has been explicit that smaller firms are still expected to deliver the same good outcomes as larger firms, but that implementation can look different in practice. Because the Duty is outcomes-based rather than process-heavy, the evidence a smaller broker needs to produce is expected to be proportionate to its size, resources and customer base, rather than mirroring the compliance infrastructure of a large insurer.
Active Supervision, Not a One-Off Deadline
The Duty didn't end with the 2023 and 2024 implementation deadlines. The FCA has continued publishing thematic reviews and examples of good and poor practice specific to general insurance and pure protection product governance, and has said the Duty remains a central and ongoing supervisory focus, with firms expected to keep evidencing good outcomes rather than treating implementation as a completed project.
What It Means for You as a Consumer
For policyholders, the practical effects of the Consumer Duty are more likely to show up gradually, in how insurers communicate and support you, than as a single visible change to a policy document.
Clearer, More Testable Communication
You should notice insurers and brokers putting more effort into explaining policies, exclusions and claims processes in plain language, since firms are expected to test whether customers actually understand key information rather than simply providing it.
Fewer Unreasonable Barriers to Claiming or Switching
The consumer support outcome specifically targets unreasonable friction, such as making it far harder to cancel or claim than it was to buy. If you experience this kind of imbalance, it's directly relevant to raise it as part of a complaint.
A Stronger Basis for Complaints About Value
If you believe a product genuinely doesn't offer reasonable value for what it costs, the fair value outcome gives you a clearer regulatory basis to challenge that with the firm, and ultimately with the Financial Ombudsman Service if the complaint isn't resolved.
It Does Not Remove the Need to Compare Policies Yourself
The Duty raises the floor on how firms must behave; it doesn't do your shopping around for you. Comparing cover, price and exclusions across providers, using guides like our Car Insurance UK or Home Insurance UK guides, remains just as relevant as before.
What the Consumer Duty Does Not Mean
Because the Consumer Duty is often summarised in very general terms, it's easy to assume it guarantees more than it actually does. The following distinctions matter.
It Does Not Set Prices or Cap Profit
Fair value is about whether a price is reasonable relative to the benefits provided, not a fixed price the FCA sets or a limit on insurer profit. Two insurers can charge different prices for broadly similar cover and both still satisfy the fair value outcome, provided each price is justified by what the customer receives.
It Does Not Guarantee the Cheapest Quote
Nothing in the Duty requires an insurer to offer the lowest price in the market. A higher-priced policy with genuinely stronger benefits, wider cover or better claims service can still meet the fair value requirement.
It Does Not Create a New Right to Sue a Firm Directly
The FCA considered introducing a private right of action allowing consumers to sue firms directly in court for breaching the Duty, but decided not to introduce one, taking the view that the existing complaints and Financial Ombudsman Service framework remains the appropriate route for almost all consumers. The FCA has said it will keep this position under review, but as things stand, a Consumer Duty breach on its own does not give you a new standalone legal claim outside that existing framework.
It Does Not Replace Specific Existing Rules
The Duty sits alongside, rather than replaces, more specific existing FCA rules that already apply to insurance, including the general insurance pricing rules and the claims handling requirements in ICOBS. Where a more specific rule already governs a situation, that rule continues to apply in addition to the Duty's broader outcomes.
It Is Not Retrospective
The Duty applies to relevant actions firms take from the applicable implementation date onward. It does not reach back to judge decisions a firm made before the Duty applied, even if that decision affects a policy you still hold today.
Worked Examples
Example: Querying Value on a Renewal
A policyholder notices their home insurance renewal premium has increased significantly with no change in circumstances or claims. They ask the insurer to explain how the price reflects fair value under the Consumer Duty. The insurer is expected to be able to explain, in clear terms, what has changed and why the price is reasonable relative to the cover provided, rather than simply restating the new figure.
Example: Difficulty Cancelling a Policy
A customer finds that cancelling a policy requires a lengthy phone call with long wait times, while buying the policy online took minutes. This kind of imbalance is directly relevant to the consumer support outcome, and raising it as a complaint gives the firm a clear regulatory basis on which to respond and, where appropriate, put things right.
Example: Confusing Wording in a Policy Document
A customer struggles to understand a key exclusion written in dense legal language and later has a claim declined on the basis of that exclusion. Under the consumer understanding outcome, firms are expected to test whether communications like this are genuinely understood by customers, which is relevant context when challenging how clearly a term was explained at the point of sale.
Common Mistakes to Avoid
- Assuming the Consumer Duty means every insurer must charge the same or the lowest price.
- Confusing the Consumer Duty with the price-walking rules, which are a narrower, separate requirement.
- Confusing the Consumer Duty with FSCS protection, which covers insurer insolvency, not day-to-day conduct.
- Assuming a Consumer Duty breach gives you an automatic right to sue a firm directly in court.
- Not raising a fair value or service concern directly with the firm before escalating to the Financial Ombudsman Service.
- Assuming the Duty applies retrospectively to decisions made before it took effect.
Common Myths
- Myth: The Consumer Duty sets a maximum price for insurance. It requires firms to assess whether their price is reasonable for the benefits provided, not to charge a fixed or capped amount.
- Myth: You can now sue your insurer directly for breaching the Duty. The FCA has not introduced a private right of action; redress still runs through the firm and then the Financial Ombudsman Service.
- Myth: The Consumer Duty is the same rule as the price-walking ban. They're separate rules with different scopes and different start dates.
- Myth: Smaller brokers don't have to follow the Consumer Duty. They're expected to deliver the same good outcomes, just with evidence proportionate to their size.
- Myth: The Duty only applied once, back in 2023. The FCA continues active supervision and publishes ongoing good and poor practice reviews specific to insurance.
Frequently Asked Questions
What is the FCA's Consumer Duty?
The Consumer Duty is a set of FCA rules requiring firms, including insurers and insurance intermediaries, to act to deliver good outcomes for retail customers. It applies a consumer principle, three cross-cutting rules and four detailed outcomes covering products and services, price and value, consumer understanding, and consumer support.
When did the Consumer Duty come into force for insurance?
The Duty applied from 31 July 2023 to new and existing products and services open to sale or renewal, and from 31 July 2024 to closed products and services no longer marketed, distributed or renewed since July 2023.
Does the Consumer Duty apply to all insurance policies?
It applies broadly to general insurance and pure protection products sold to retail customers, but excludes reinsurance, certain large commercial risks located outside the UK, activities connected to distributing group insurance to new members, and fully bespoke contracts negotiated individually for a specific customer's needs.
What does fair value mean under the Consumer Duty?
Fair value refers to the relationship between the price a customer pays and the benefits they can reasonably expect to receive. It does not mean the FCA sets prices or caps profit; firms must instead carry out their own fair value assessments and be able to evidence them.
Can I sue my insurer directly for breaching the Consumer Duty?
No. The FCA has not introduced a private right of action for the Consumer Duty. The main route for consumers remains complaining to the firm first and, if unresolved, referring the complaint to the Financial Ombudsman Service.
Does the Consumer Duty guarantee the cheapest insurance price?
No. The Duty requires firms to assess whether a price is reasonable relative to the benefits provided, not to offer the lowest price in the market. A higher-priced policy can still meet the fair value requirement if the benefits justify the cost.
How is the Consumer Duty different from the FCA's price-walking rules?
The price-walking rules are a narrower, earlier set of requirements specific to home and motor insurance renewal pricing, in force since January 2022. The Consumer Duty is a broader, later principle-based standard covering all four outcomes across most retail general insurance and protection products, and sits alongside rather than replaces the price-walking rules.
Does the Consumer Duty replace FSCS protection?
No. FSCS protection is a separate compensation scheme that can pay out if an authorised insurer fails. The Consumer Duty is a conduct standard governing how firms treat customers day to day and does not provide compensation if a firm becomes insolvent.
How do smaller insurance brokers apply the Consumer Duty?
Smaller firms are expected to deliver the same good outcomes as larger firms, but the FCA has said implementation should be proportionate to a firm's size, resources and customer base, with evidence scaled accordingly rather than requiring identical processes to a large insurer.
What should I do if I think my insurer isn't meeting the Consumer Duty?
Raise the issue directly with the insurer or broker first, since firms are expected to resolve concerns as part of delivering good outcomes. If you remain unhappy after receiving a final response, or if eight weeks pass without one, you can refer the complaint to the Financial Ombudsman Service.
References and Editorial Standards
This guide is based on the FCA's published Consumer Duty rules and guidance, including "About the Consumer Duty" and related FCA publications, current at the time of writing. It is intended for general educational purposes and does not constitute legal, regulatory or financial advice. The FCA may update its guidance and priorities over time, so readers should check current FCA sources for the latest position, particularly if reading this guide some time after publication.
| Version | Date | Change |
|---|---|---|
| 1.0 | 14 August 2026 | Initial publication |
Conclusion
The Consumer Duty is one of the most significant pieces of FCA regulation to affect UK insurance in recent years, but its practical effect is best understood as raising the standard of care firms owe you, rather than as a specific new benefit, price guarantee or legal right. It works alongside more specific protections, including the price-walking rules and FSCS compensation, rather than replacing either of them.
If something about how an insurer has priced, sold, explained or supported a policy doesn't sit right, the Duty gives you a clearer, more concrete basis to challenge it, starting with a direct complaint to the firm and, if necessary, the Financial Ombudsman Service. For related guidance, see our FCA Price-Walking Rules UK and FSCS Protection UK guides.