Consumer Duty, Vulnerable Customers & Fair Value – Where Are We Now?

So, where are we now with the UK Financial Conduct Authority (FCA)’s new Consumer Duty? This sweeping regulation, which introduced a higher standard of consumer protection (Principle 12) for financial firms, is fully in force and financial services professionals have spent the last couple of years mobilising this change. Now in late 2025, the focus has shifted from initial implementation to embedding the Duty in day-to-day operations. The FCA has made it clear that Consumer Duty remains a top priority in its 2025–2030 strategy.

In this article, we provide an FCA Consumer Duty update and examine how firms are supporting vulnerable customers and ensuring fair value, drawing on the latest 2025 developments. We’ll also touch on practical aspects like how to do a fair value assessment and the use of Consumer Duty template documents to maintain compliance.

FCA Consumer Duty Update: 2025 Progress and Priorities

One year on, the Consumer Duty is entering a mature phase of supervision and refinement. The FCA’s message to firms is that the heavy lifting of rule-making is done – rather than issuing lots of new prescriptive rules, the regulator is relying on the broad Duty to raise standards across sectors. In other words, firms should now have the Consumer Duty woven into their culture, governance and product oversight, and the FCA’s role is to ensure its properly embedded. The regulator is actively monitoring firms’ progress and has committed to sharing examples of good and poor practices so that the industry can learn and improve. For example, in September 2025 the FCA published its priority focus areas for 2025/26, highlighting continued work on outcomes monitoring, fair value, customer support and other thematic reviews across different sectors: see here: Our Consumer Duty focus areas | FCA.

A notable area of weakness is with Board Reports, firms are required to produce at least an annual Consumer Duty board report reviewing customer outcomes and compliance with the Duty. The FCA issued additional guidance in late 2024 to help firms strengthen these board reports, reflecting the importance of robust oversight. Early feedback from the first round of board reports showed a mixed picture – some firms were innovative in using data to spot issues (like real-time indicators for early intervention with struggling or vulnerable customers), while others provided reports that lacked specificity or sufficient focus on certain customer groups. The FCA’s overarching message is “keep improving”: use governance processes to challenge whether good outcomes are truly being delivered, and don’t treat Consumer Duty as a one-off project.

Vulnerable Customers – FCA’s Work and Findings

Protecting vulnerable customers has long been an FCA priority, and the Consumer Duty has renewed attention on this area. The FCA’s 2021 guidance on the fair treatment of vulnerable customers remains in force and is viewed as effective – in fact, the FCA found that the new Consumer Duty and the vulnerability guidance complement each other well. In 2024, the FCA undertook a major review of how firms are treating customers in vulnerable circumstances, culminating in a report published 7 March 2025 with findings and examples of good and poor practice. Again the results mixed, on the positive side, many firms have taken action and made good progress in improving support for vulnerable customers. On the other hand, the FCA highlighted significant gaps: for example, many firms failed to properly monitor outcomes for their vulnerable customers or to provide proactive support when needed. Tellingly, only about 4 in 10 consumers with characteristics of vulnerability have disclosed their circumstances to any of their financial providers meaning a large majority of vulnerable individuals are not flagging their situations, and firms may be unaware of customers who need extra help. Moreover, even when vulnerabilities are known, the FCA found that these consumers (especially those with multiple vulnerability factors) may not consistently get outcomes as good as other customers.

In response, the FCA has provided case studies and examples to guide firms on better practices. Key lessons include the need for firms to actively identify potential vulnerability (not just wait for disclosure) and to tailor their communications, support channels, and product design accordingly. The FCA noted good practices such as firms using data analytics to spot where vulnerable customers might be experiencing worse outcomes (for instance, monitoring if complaints or churn rates are higher for certain groups). Training frontline staff to handle vulnerability with empathy and flexibility was another positive practice observed. A crucial point is to create an environment where customers feel safe to disclose their needs. The FCA suggests directly asking customers about their support needs or preferences and making it easy for them to volunteer information, rather than tiptoeing around the term “vulnerability”. By opening up that dialogue, firms can uncover issues (like a health condition or financial hardship) and offer appropriate help – for example, more frequent check-ins, adjusted communication formats, or flexible payment options.

Looking ahead, the FCA is also addressing some practical challenges firms face in supporting vulnerable clients. One such challenge is balancing data protection rules with the need to share information about a customer’s needs internally or with partners to ensure they get the right support. The FCA, together with the Information Commissioner’s Office (ICO), has acknowledged this tension and plans to issue further guidance on reconciling vulnerability data sharing with data protection in the first quarter of 2026. This should help firms feel more confident in using customer data (responsibly) to assist vulnerable individuals without falling foul of privacy regulations. Overall, the status in 2025 is that vulnerability remains front-and-centre: the FCA is largely sticking with its existing rules but expects firms to step up execution, using the Consumer Duty as a catalyst to ensure vulnerable customers consistently receive fair, not inferior, outcomes.

Fair Value Under Consumer Duty: How to Do a Fair Value Assessment

Achieving “fair value” for consumers is one of the four desired outcomes under the Consumer Duty, and arguably the most quantifiable one. At its core, fair value means that the price a customer pays for a product or service is reasonable compared to the benefits and quality they receive. In practice, this requires firms to assess whether different groups of customers are getting value for money, and to take action if not. The FCA has intentionally avoided a one-size-fits-all formula for fair value – instead of strict price caps or a fixed methodology, the regulator expects firms to take a proportionate, evidence-based approach to fair value assessments. Put simply, each firm must develop its own framework to judge value, appropriate to its products and customers, and be able to show why it believes the value is fair (or identify if it’s not).

How do you do a fair value assessment in practice? The FCA’s guidance and feedback over the past year point to several best practices. First, clearly identify the target market for the product and any distinct customer segments within it. A product might serve multiple types of customers – for example, a financial planning service could have a tech-savvy segment using a basic app and another segment of less tech-savvy or more vulnerable customers needing extra support. Assess value for each segment separately if their experiences differ. It’s acceptable to “bundle” products or customers in an assessment only if they are sufficiently similar in how they benefit from the product. Second, evaluate the total charges paid versus benefits received for those customers. This isn’t just the headline price; include fees, interest, or other costs, and weigh them against the outcomes customers achieve. The evaluation should consider different consumer groups – the FCA specifically warns firms to be alert that certain groups (particularly customers with characteristics of vulnerability or those in a cross-subsidising arrangement) aren’t unknowingly subsidising others while getting a raw deal. For instance, if long-standing loyal customers are paying more for the same service than new customers (a form of price discrimination), is that justified by extra benefits or just an unfair loyalty penalty? Firms should use data to identify such patterns.

Evidence is vital in these assessments. The FCA expects firms to back up their conclusions with data or analysis, though in a way that’s proportionate to the firm’s size and the product’s complexity. A large bank might undertake a very granular value analysis with extensive customer research, whereas a small firm might use a simpler, but still logical, rationale – the key is that there is some factual basis for saying “yes, this product provides fair value” or “no, it doesn’t for this subset of customers.” Crucially, a fair value assessment must reach a conclusion. One FCA observation of poor practice was that some firms produced lengthy assessments that never actually stated whether the product was fair value or not! A wishy-washy analysis is not enough – if the answer is “no” or “borderline,” the firm should say so and have a plan to address it. The FCA has indicated it will question the quality of any assessment that doesn’t take a clear stance. And if a product isn’t delivering fair value, firms are expected to take action (for example, reducing fees, improving benefits, or ultimately withdrawing or redesigning the product) and to do so under proper governance oversight.

Another important aspect is not to silo fair value from the other Consumer Duty outcomes. Fair value doesn’t exist in a vacuum – it’s closely linked with the product design, how well consumers understand the product, and the support they receive. The FCA advises firms to take a holistic view: evidence from complaints, usage data, or customer feedback about the product can inform the fair value judgement.

Finally, performing a fair value assessment is not a one-and-done exercise. The FCA requires firms to review fair value regularly – at intervals appropriate to the product’s nature, and whenever there’s a significant change to the product or market conditions. Firms should think about continually evolving their value assessment and benchmarking against industry standards, such as our template: Consumer Duty Templates | RB Compliance Consultancy

Embedding Consumer Duty: Template Documents and Next Steps

As the Consumer Duty moves from project phase to business-as-usual, firms are using various tools and processes to keep on top of their obligations. Many have developed or adopted Consumer Duty template documents to structure their compliance. These templates cover everything from initial gap analyses and product approval checklists to fair value assessment forms and board report decks. For example, some compliance consultancies offer ready-made value assessment templates (aligned with FCA rules in PRIN 2A.4) that prompt firms to analyse different customer groups, outcomes, and recent FCA feedback on fair value. There are also Consumer Duty board report templates designed to meet the FCA’s expectations for at-least-annual Board reviews of Consumer Duty performance. Such templates can be a helpful starting point, ensuring that firms cover all the key points – product governance, price and value, customer understanding, support, data monitoring, etc. – in a structured way. Take a look at our templates: Consumer Duty Templates | RB Compliance Consultancy

In summary, as of late 2025 the Consumer Duty is in full swing, driving a cultural shift in UK financial services. Firms are expected to actively prove that they are delivering good outcomes – especially regarding vulnerable customers and fair value. The FCA’s recent updates show a regulatory stance that is firm but also collaborative: rather than rushing out new rules, the FCA is refining the framework, removing unnecessary burdens (like the board champion formality) while doubling down on outcomes and accountability. For financial services professionals, the task now is to keep the momentum: continuously improve how you identify and support vulnerable customers, rigorously assess and evidence fair value, and make use of tools (from data analytics to template documents) to embed the Consumer Duty into everyday processes. By doing so, firms won’t just stay on the right side of the regulator – they’ll likely see more loyal customers and sustainable business in return, which is the ultimate win-win outcome the Consumer Duty aims to achieve