Firms set to put customer needs first thanks to new Consumer Duty regulation

Group Head of Compliance Asma Arif discusses the implications of new Consumer Duty rules

The current state of affairs

The challenging times of tight household finances brought on by the cost-of-living crisis significantly strain the UK economy and create uncertainty as a customer’s needs continuously change. The BoE has reported the current inflation rate at 10.1% and the current bank rate at 4% (by BoE dd 09/03/2023). While the prices of goods and services rise, robust customer protection and enforcement are increasingly necessary. 

To combat this, the Financial Conduct Authority (FCA) is placing greater scrutiny through the new legislation to ensure firms continue to learn, develop, and improve internally to better assist vulnerable customers in the rapidly changing financial services industry. As per the FCA, the new consumer duty proposal will significantly restructure the financial sector and fundamentally improve how firms treat their customers. 

The duty is more outcome-focused than before, with the new Principle 12, which states that “a firm must act to deliver good outcomes for retail customers”. The duty imposes significant responsibility on boards to implement necessary modifications, including product governance, vulnerable clients, and financial literacy. To comply, all firms must analyse how they manufacture, distribute, and serve the retail industry.

New research carried out by consultancy group Definition, supports this in urging companies to undertake qualitative research to gauge their customers’ understanding of their products and services as their results uncovered overestimated financial comprehension. Customers should receive quality service at an affordable cost instead of firms overcharging their customers, marketing subpar products and impeding the ability of customers to make educated decisions.

What does this mean for firms?

According to the FCA, the duty will impact firms and their products and services differently. Although specific provisions of the new duty will not apply to firms with no direct contractual connection to retail customers, it will aim to raise standards in all contexts. The FCA has indicated the cost of the implementation to comply with the consumer duty could cost the industry between £688.6m – £2.4bn.

By implementing the new consumer duty in the final months before the deadline (31st of July 2023), for many firms, the duty calls for modifications by embedding the new Principle 12 supported by a set of cross-cutting rules which are reinforced by the four outcomes: governance of products and services, price and value, consumer understanding and consumer support. 

At Hilbert, we are pleased that the FCA has introduced this new duty obligation to raise bars in all circumstances to put customers at the centre and ensure innovation and healthy competition in the interest of the retail customers. We evaluate each of our products & services, customer journeys and communications, considering the new duty and putting procedures in place to modify and enhance current evaluation frameworks to ensure we comply with the requirement before the FCA’s deadline.

For an investor or intermediary, it’s important to understand the new standards this regulation requires and ensure that you are confident or easily able to confirm that any product you are purchasing conforms. The best product and service providers will have embraced this change and used it as an opportunity to optimise all aspects of the purchase and holding experience for the financial products and services they offer.

Investing with Hilbert

Hilbert Investment Solutions specialises in structured investments for retail clients and institutions; this experience enables us to develop tailor-made products offering attractive yield and solid capital protection. The team at Hilbert have been working hard to ensure our products and services, customer journeys and communications consider the Consumer duty to comply with all requirements and recommendations.

For more information regarding our solutions or other products and services, please visit Alternatively, call +44 203808 7138 or email

Asma Arif – Group Head of Compliance | Non-Executive Director

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