“You are not an international oil trader or metals trader or commodities trader earning a million a year staring at eight screens at your desk in the City. No, you are that guy on the train home after work with his smartphone in his hand or that bloke sitting on the toilet upstairs with his iPad balanced on his knees as his wife cooks a meal downstairs.” — Chris Stringman (2017), Win, Lose, Repeat: My life as a Gambler from Coin-pushers to Spread-betting, Ortus Press
The Financial Conduct Authority’s Consumer Duty (“the Duty”) has now come into force, ushering in a new era of accountability and consumer-centric governance. Initially proposed in Consultation Paper CP21/13 and refined in CP21/36, the Duty establishes a higher standard of care for firms offering retail financial services — including retail brokers.
Although implementation deadlines have passed, the Duty is not a one-off compliance task. It requires ongoing attention from senior managers across the retail broking sector as they assess business models and client outcomes through a new regulatory lens.
This article recaps key elements of the Duty and provides self-assessment questions for retail brokers looking to evaluate their alignment with FCA expectations.
What is the ‘Consumer Principle’ and why does it matter to brokers?
At the heart of the Duty is the Consumer Principle:
“A firm must act to deliver good outcomes for retail clients.”
Unlike prescriptive rulebooks, the Duty adopts a principles-based, outcomes-driven approach. This allows the FCA to adapt quickly to market innovation, consumer behaviour trends, and evolving technologies. For example, the regulator has cited self-directed investing in high-risk products (such as CFDs) as a key driver of regulatory concern — referencing behavioural research like Understanding Self-Directed Investors (2021, BritainThinks).
Importantly, the Duty expects firms to mitigate foreseeable harm. The FCA provides examples of good and poor practice, but the onus is on firms to embed a culture of fairness and transparency rather than relying on rule compliance alone.
Self-assessment questions:
- How is the Consumer Principle embedded in your firm’s business strategy?
- If asked by the FCA, how would you demonstrate alignment with this principle?
What outcomes is the Consumer Duty seeking?
Cross-cutting rules introduced by the Consumer Duty help firms to achieve the following four outcomes:
Consumer Duty outcomes: Products, services and information
- Products and services: are subject to a rigorous product approval process that clearly identifies the needs and vulnerabilities of stated target markets. The anticipated performance of products is tested and their actual performance subject to ongoing monitoring post launch.
- Price and value: firms’ charging structures are clear, fair and supported by fair value assessments that do not exploit customer behaviour.
- Consumer understanding: communications issued by firms help clients make informed decisions that align with their financial objectives.
- Consumer support: that is responsive, empathetic, and accessible.
Self-assessment questions:
- Are your target markets clearly defined and evidenced?
- Have your product disclosures been tested with real-world audiences (e.g. the “guy on the train” or the “bloke on the toilet”, as Stringman colourfully describes)?
- Are disclosures clear across all mediums — from PDF documents to TV and social media ads?
- How do you ensure that products don’t exploit behavioural biases, big data, or customer inertia?
- Have you reviewed practices such as charging inactivity fees through a Consumer Duty lens?
- Is your customer support empathetic, easy to access, and evaluated via mystery shopping or review platforms like Trustpilot?
- How are complaints data and client attrition trends used to improve products and processes?
- Do your third-party distributors and promoters receive adequate training on the Duty?
Interaction with the SMCR
The Duty has implications for the Senior Managers and Certification Regime (SMCR), particularly for those engaged in retail activities.
A new individual conduct rule now applies:
“Act to deliver good outcomes for retail clients.”
This replaces the former COCON Rule 4 in retail contexts, while still applying to wholesale activities where relevant.
Self-assessment questions:
- Are lessons from complaints, reviews, and client feedback incorporated into training for staff providing retail services?
- Have you used external resources — such as guidance from the Financial Ombudsman Service or gambling support organisations — to better understand vulnerable client behaviour?
Implementation and beyond
The Duty is now fully in effect, with firms expected to demonstrate compliance through evidence and continuous improvement. Although the FCA opted against introducing a private right of action, it will use its full supervisory toolkit to ensure firms are meeting expectations — including thematic reviews, consumer testing and targeted engagement.
Self-assessment questions:
- Have you conducted a post-implementation review to assess ongoing resource allocation, governance and alignment with Duty requirements?
- Is there board-level oversight and engagement with outcomes and compliance data?
Summary
You might not be the “bloke on the toilet with an iPad” placing spread bets, but the Consumer Duty demands that you understand — and design around — people like him.
The retail investor base is broad, distracted, and vulnerable to behavioural nudges. The Duty pushes retail brokers to ensure their business models serve real human needs, not just regulatory checklists. That shift requires more than compliance — it requires culture, curiosity, and a willingness to see the world through the customer’s eyes.
Need help navigating the Consumer Duty for retail brokers?
C&G’s consultants can support your implementation strategy, compliance reviews, and post-launch assessments. Get in touch for tailored guidance.
A version of this article was originally published by Thomson Reuters © Thomson Reuters.
