Consumer Duty enforcement is here – 11 investigations and counting

From the outset, the FCA recognised that firms would need some time to embed the Duty, and that it did not expect to use its enforcement powers immediately.  That period of leniency is clearly over: the FCA has gone from 6 open matters (reported in Enforcement Watch 1) to 11, spanning insurance, pensions, wealth management, consumer investments, peer-to-peer lending, and claims management.

In several cases, the FCA is investigating whether consumers received fair value for a product or service in line with PRIN 2A and/or its PROD Rules.  Fair value is about more than just price: a product or service that does not meet any of the customer's needs, causes foreseeable harm, or frustrates their objectives is unlikely to offer fair value whatever the price, and firms cannot act in good faith if they knowingly manufacture or distribute poor value products or services.

The FCA is not only interested in price and value; the different parts of the Consumer Duty often overlap, and a product or service that does not meet its customers' needs may fall short of the Duty in several ways.

The FCA may look at:

• whether the product was designed with its target market in mind (products and services outcome);
• whether it delivers fair value (price and value outcome);
• whether features, benefits, and exclusions were made clear to customers before, during, and after sale (consumer understanding outcome); and
• what support was given to customers when things went wrong (consumer support outcome).

Last financial year, the FCA intervened 382 times.  Its assertive supervisory options range from a conversation to the imposition of requirements, and where those interventions are sufficient to address the harm, there may be no need for a formal enforcement investigation.  Firms should not be comforted by the fact that supervisory engagement has not escalated to formal enforcement: the FCA's examples show that voluntary requirements (VREQs) and own-initiative requirements (OIREQs) are being used frequently and published on the Financial Services Register.

Three investigations have been opened into firms operating in the home and travel insurance sector following a multi-firm review into claims handling arrangements, which found shortcomings including delays, high rejection rates, inconsistent outcomes, missed complaints, and incorrect claims decisions.  Two investigations relate to claims management companies in the motor finance sector, with the FCA taking the unusual step of publicly announcing both investigations to allow customers to consider their options.

In at least one investigation into a wealth management firm, the FCA is examining whether those with vulnerable characteristics experienced heightened and/or foreseeable harm.  Similarly, in the home and travel insurance investigations, the potential harm includes vulnerable customers experiencing heightened and foreseeable harm.  Firms must ensure that their Consumer Duty frameworks specifically address vulnerability, including within their monitoring and management information.

In one case involving a wealth management firm, the FCA identified Consumer Duty-related concerns including whether the firm had appropriately considered its influence on retail client outcomes in the distribution chain and was appropriately supporting vulnerable clients.  In another case, a CFD trading platform was provided with feedback on its Consumer Duty compliance after it was found to be receiving business from two unauthorised introducers whose practices gave investors a false sense of possible returns.  Firms must apply robust due diligence to their distribution arrangements and satisfy themselves that all parties in the chain are acting consistently with the Duty.

A housing disrepair CMC was invited to sign a VREQ to cease promotions and commission an independent review of its marketing, systems, and controls following concerns about repeated apparently non-compliant and potentially misleading financial promotions, including failures to clearly disclose free alternatives and fees.  Separately, FCA has disclosed on the 4 July 2026 that Consultation Claims Limited is under investigation for concerns that during April to December 2025, consumers may have been signed up to agreements without their consent, with allegations that signatures were forged.

Since the Consumer Duty was introduced, the FCA has commissioned around 30 skilled person reviews which reference the Duty.  The FCA also supports firms by publishing examples of good practice and areas for improvement, often resulting from multi-firm work where it assesses several firms against a thematic area.  Firms should be aware that a skilled person review may precede or accompany an enforcement investigation, and that multi-firm review findings are actively being followed up.

The FCA expects firms to hold themselves to high standards, proactively identify and prevent customer harm, and be able to demonstrate that they are delivering good consumer outcomes. While the FCA has indicated that it will take a pragmatic approach and work constructively with firms that are doing the right thing, it is also becoming increasingly assertive in its supervisory approach. This extends beyond formal enforcement action to the use of its full range of supervisory powers to intervene quickly where it believes customers are at risk of harm.