From TCF to Consumer Duty: What Changed in the Obligation

Treating Customers Fairly and Consumer Duty cover much of the same ground. But the differences in how each obligation operates — in governance, evidencing, enforcement and the standard of outcome expected — are material. Firms that treat Consumer Duty as TCF with a new name are not complying with it.

Treating Customers Fairly was the dominant conduct framework for FCA-regulated retail firms for nearly two decades. When Consumer Duty came into force in July 2023, it did not replace TCF — Principle 6 and the TCF obligations remain live. But Consumer Duty raised the standard materially, changed how firms must evidence compliance, and shifted the FCA’s enforcement posture. This post explains what actually changed and where firms most commonly misunderstand the transition.

TCF: A Principles-Based Framework With Process Focus

TCF, operationalised through Principle 6 (“a firm must pay due regard to the interests of its customers and treat them fairly”), was a high-level obligation. The FCA articulated six consumer outcomes it expected firms to achieve, but the mechanism was largely principles-based: firms had to demonstrate that treating customers fairly was embedded in their culture, and that their processes were designed to produce fair outcomes.

In practice, TCF compliance was evidenced through management information — reports showing complaints data, mystery shopping, product performance monitoring, staff training records. The obligation was predominantly backward-looking: the question was whether the firm had processes in place and whether those processes had produced fair outcomes in aggregate. It was also predominantly passive in its governance requirements — boards received MI on TCF outcomes but there was no prescribed format for how that oversight should be structured or how frequently it needed to occur.

Consumer Duty: A Prescriptive Outcomes Framework

Consumer Duty operates through Principle 12 — “a firm must act to deliver good outcomes for retail customers” — supported by four prescribed outcome areas and three cross-cutting rules. The shift from TCF is in three dimensions: specificity, proactivity and governance intensity.

Specificity. Where TCF required firms to treat customers fairly in general terms, Consumer Duty specifies four outcome areas that firms must actively deliver: products and services that are fit for purpose, fair value, consumer understanding, and consumer support. Each outcome area has supporting rules in PRIN and COBS that define in practical terms what “delivering good outcomes” means. Firms cannot satisfy Consumer Duty with a general statement that they treat customers fairly — they must demonstrate performance against each outcome area specifically.

Proactivity. TCF focused materially on whether harm had occurred — whether the firm’s products and processes had produced fair outcomes in practice. Consumer Duty adds a forward-looking obligation: firms must act to avoid foreseeable harm, not merely respond to harm after it occurs. A firm that identifies a product feature that is likely to cause poor outcomes for a segment of its customer base must act to remediate it, even if no customer has yet complained. This is a fundamentally different compliance posture from TCF.

Governance intensity. Consumer Duty requires a documented annual board report assessing whether the firm is delivering good outcomes across all four areas. This is a prescribed governance obligation — not a management information package, but a formal board-level assessment that must be signed off by the appropriate senior manager. Under TCF, the board received MI; under Consumer Duty, the board owns the outcome assessment and is accountable for remedial action where outcomes are falling short.

The Fair Value Obligation: TCF Had No Equivalent

The Consumer Duty price and value outcome is probably the most significant new obligation — it has no meaningful equivalent in TCF. Firms must assess and be able to demonstrate that the price customers pay for a product or service is reasonable relative to the benefits they receive. This requires a structured fair value assessment covering: the costs of the product, the benefits delivered to the target market, the value relative to comparable products in the market, and whether different segments of the customer base receive materially different value for the same price.

For wealth management firms, the fair value obligation has direct implications for charging structures — particularly trail commissions, adviser charges and platform fees applied to legacy products where ongoing service levels may not justify the ongoing charge. The FCA has been explicit that fair value assessments must be genuinely analytical, not a narrative explanation of why the firm believes its pricing is reasonable.

Distribution Chain Obligations: No TCF Equivalent

Consumer Duty imposes obligations across the entire distribution chain in a way TCF did not. Manufacturers — firms that create or significantly adapt products — must define a target market, conduct fair value assessments, and share the information distributors need to sell the product appropriately. Distributors must act consistently with the manufacturer’s target market and fair value assessment and must share outcome data with manufacturers.

Under TCF, a firm could discharge its obligations primarily by reference to its own processes. Under Consumer Duty, a distributor cannot claim good consumer outcomes if it is distributing a product to customers outside its intended target market, even if the distributor’s own processes are sound. The obligation runs through the chain.

The Evidencing Shift: From Process to Outcomes

Under TCF, firms typically evidenced compliance through process documentation — training records, policy documents, MI packs. The FCA’s supervisory approach was largely to check that the processes were in place and that MI showed broadly acceptable outcomes. A firm with well-documented TCF processes could generally satisfy supervisory scrutiny even where individual customer outcomes were suboptimal, provided the process failures were not systemic.

Consumer Duty changes the evidencing standard. Firms must demonstrate actual outcomes, not just sound processes. MI under Consumer Duty should show: the proportion of the target market receiving the intended product outcomes; fair value assessment results; consumer understanding testing (for communications); consumer support resolution rates and accessibility metrics; and the outcomes for vulnerable customers compared to the general customer population. Process documentation remains important as evidence of how the firm intends to produce good outcomes — but it cannot substitute for evidence that good outcomes are actually being achieved.

What TCF Compliance Does — and Does Not — Cover Under the New Regime

TCF remains live under Principle 6. A firm cannot satisfy Principle 6 by reference to Consumer Duty compliance alone — the two obligations are parallel, not substitutes. In practice, however, a firm with a mature Consumer Duty framework will typically satisfy its TCF obligations as a consequence, because Consumer Duty sets a higher standard in almost every area.

The areas where firms with legacy TCF frameworks most commonly fall short of Consumer Duty are: the fair value assessment (TCF had no equivalent); the annual board report (TCF had no prescribed governance format); consumer understanding testing (TCF focused on clear communication but did not require testing comprehension); and the forward-looking harm prevention obligation (TCF was primarily backward-looking). Firms migrating from a TCF compliance mindset need to address each of these gaps specifically — they cannot be filled by more of the same TCF-style MI.

Key References

• FCA — Consumer Duty guidance and resources
• FCA Handbook PRIN 2A — The Consumer Duty