Introduction
The Financial Conduct Authority (FCA) continues to refine its regulatory framework to balance consumer protection, market integrity, and economic growth. Recently, the FCA clarified that appointing a Consumer Duty Champion is no longer mandatory but remains a recommended best practice. The FCA has emphasised that firms should still designate a senior individual with the authority and oversight responsibility for Consumer Duty compliance.
This update reflects the FCA’s goal to reduce regulatory burdens while preserving key consumer protection standards. The shift also aligns with broader efforts to foster responsible risk-taking and long-term economic stability. However, it raises important questions about how consumer protection standards will be maintained moving forward.
Rationale and Scope
The Consumer Duty Champion role was initially introduced to provide an extra layer of oversight for ensuring adherence to Consumer Duty standards. The FCA’s decision to make this role optional follows feedback highlighting concerns over regulatory complexity and the speed of reforms. Additionally, this decision complements the FCA’s alignment with international guidance, such as the International Organisation of Securities Commissions (IOSCO) and Financial Stability Board (FSB) principles on liquidity risk management.
Applicable Firms
This update affects all FCA-authorised firms previously required to appoint a Consumer Duty Champion. These include banks, insurers, investment firms, and other UK-based financial service providers. The change is particularly relevant for large firms with complex operations and smaller firms where the requirement may have posed an administrative burden. For firms already integrating Consumer Duty principles into their governance structures, this change may have limited operational impact.
Consumer Duty – Next Steps
The FCA’s emphasis now lies in embedding Consumer Duty principles across governance and risk management frameworks. Instead of relying on a dedicated Champion, firms are encouraged to adopt a firm-wide approach. This direction aligns with the FCA’s broader strategic partnership with the UK government on financial services policy, advocating for a reassessment of risk appetite and a collective commitment to reducing consumer harm.
Firms are reminded that the core obligations under the Consumer Duty remain intact. According to PRIN 2A of the FCA Handbook and the guidance in FG22/5, firms must:
- Act in the best interests of consumers;
- Avoid causing foreseeable harm; and
- Enable informed consumer decision-making.
The FCA has also indicated that its upcoming five-year strategy will prioritise regulatory stability, aiming to reduce the frequency of wide-reaching policy changes.
What Firms Can Do
Firms should take proactive measures to maintain compliance with Consumer Duty expectations. Suggested actions include:
- Reviewing internal governance structures to ensure adequate allocation of Consumer Duty responsibilities.
- Providing additional training or resources to support oversight without a dedicated Champion role.
- Aligning internal processes with international standards such as IOSCO and FSB guidelines.
- Reassessing risk appetite and decision-making processes to promote responsible risk-taking and consumer protection.
- Monitoring upcoming FCA consultations and industry developments.
What Complyport Can Do to Help
Complyport provides tailored compliance and regulatory solutions to support Consumer Duty implementation. Our services include:
- Independent reviews and assessments of Consumer Duty monitoring frameworks;
- Assistance in preparing and evaluating Consumer Duty Board Reports;
- Enhancement of Fair Value Assessment procedures;
- Training programmes for staff on Consumer Duty compliance and regulatory expectations.
To strengthen your Consumer Duty framework, contact Complyport today.
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