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🇬🇧 '''Consumer Duty''' is a regulatory framework introduced by the [[Definition:Financial Conduct Authority (FCA) | Financial Conduct Authority (FCA)]] in the United Kingdom that sets a higher standard of care for financial services firms — including [[Definition:Insurance carrier | insurers]], [[Definition:Insurance broker | brokers]], [[Definition:Managing general agent (MGA) | MGAs]], and other [[Definition:Insurance intermediary | intermediaries]] — in how they design, distribute, and service products for retail customers. Effective from July 2023, it replaces the earlier Treating Customers Fairly principles with a more prescriptive and outcomes-focused regime, requiring firms to act in good faith, avoid causing foreseeable harm, and actively support customers in pursuing their financial objectives. For the UK insurance market, this represents a significant regulatory escalation, touching everything from [[Definition:Product governance | product governance]] to [[Definition:Claims management | claims handling]] and post-sale communications.

📐 The framework operates through four core outcomes that firms must demonstrably deliver: products and services that are fit for purpose and targeted at appropriate customer groups; fair [[Definition:Insurance pricing | pricing]] and value assessments that justify costs relative to benefits; clear and timely communications free of jargon or misleading framing; and responsive, accessible customer support throughout the [[Definition:Policy lifecycle | policy lifecycle]]. Insurers and distributors must conduct and document rigorous [[Definition:Fair value assessment | fair value assessments]] for every product, identifying the target market and testing whether the product actually meets those customers' needs. [[Definition:Lloyd's of London | Lloyd's]] market participants face additional complexity, as both [[Definition:Coverholder | coverholders]] and [[Definition:Lloyd's syndicate | syndicates]] must align their [[Definition:Delegated underwriting authority (DUA) | delegated authority]] arrangements with Consumer Duty requirements across the distribution chain.

⚖️ The practical impact on the insurance sector has been substantial. Firms have had to overhaul governance structures, invest in data capabilities to monitor customer outcomes, and scrutinize long-standing practices — such as [[Definition:Price optimization | price optimization]] and auto-renewal terms — that may previously have passed muster under lighter-touch regulation. For [[Definition:Insurtech | insurtechs]] and digital distributors, the Duty creates both obligations and opportunity: those that can demonstrate transparent, customer-centric design stand to gain competitive advantage, while those relying on opaque digital journeys face enforcement risk. As a principles-based regime backed by supervisory teeth, Consumer Duty has become one of the defining [[Definition:Regulatory compliance | compliance]] challenges for any firm operating in the UK insurance market.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Financial Conduct Authority (FCA)]]
* [[Definition:Product governance]]
* [[Definition:Fair value assessment]]
* [[Definition:Consumer protection in insurance]]
* [[Definition:Treating Customers Fairly (TCF)]]
* [[Definition:Regulatory compliance]]
{{Div col end}}

Definition:Consumer Duty - Revision history

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