Treating Customers Fairly (TCF) and Consumer Duty: An Explainer

The Evolution from TCF Principles to Substantively-Tested Outcomes

Treating Customers Fairly — TCF — was for nearly two decades the foundation of UK financial services conduct regulation. From its introduction in 2006 by the FSA through to the launch of Consumer Duty under PS22/9 in July 2023, TCF defined how regulated firms thought about their obligations to retail customers. Six TCF outcomes shaped product design, sales processes, communications, and complaint handling across UK financial services. Consumer Duty did not abolish TCF — but it materially elevated the standard, reframed the regulatory approach from outcomes-focused to substantively-tested, and added new obligations that go beyond what TCF required.

This guide explains the relationship between TCF and Consumer Duty in detail — what TCF was, how it operated, what it got right, what its limitations were, and how Consumer Duty has built on and extended the framework. It also covers the practical implications for firms transitioning their conduct frameworks from TCF-aligned to Consumer Duty-aligned operations, and the senior compliance leadership that owns the transition.

What’s missing from most online explanations is the practical interpretation of how the two frameworks coexist. TCF principles still feature in FCA Handbook references, training materials, and firm policies — but Consumer Duty is now the operative substantive standard. This guide describes how the two relate operationally and where firms should focus their effort in 2026.

What TCF Was — The Six Outcomes

TCF was introduced by the FSA in 2006 as part of its principles-based regulatory approach. Rather than prescribing detailed rules for every aspect of customer treatment, TCF set out six high-level outcomes that firms were expected to deliver:

1. Outcome 1: Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
2. Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
3. Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale
4. Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances
5. Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect
6. Outcome 6: Consumers do not face unreasonable post-sale barriers to change product, switch provider, submit a claim or make a complaint

TCF was supported by Principle 6 of the FCA’s Principles for Businesses (“A firm must pay due regard to the interests of its customers and treat them fairly”) and integrated across the FCA Handbook through specific rules on suitability, communications, complaints handling, and other customer-facing activity.

What TCF Got Right

TCF was a substantive shift in UK conduct regulation when introduced. Its strengths included:

Outcomes-focused framework

TCF moved regulation away from purely process-based compliance toward outcomes — what customers actually experienced. This shift was meaningful in 2006 and influenced UK conduct regulation substantially over the following 17 years.

Cultural emphasis

The first TCF outcome explicitly addressed culture — that fair treatment must be central to the corporate culture, not just operational compliance. This was an important regulatory recognition that customer treatment depends on cultural and incentive factors, not just procedure.

Distribution chain awareness

TCF recognised that products manufactured by one firm and distributed by another required information sharing across the chain, and that both firms had obligations to ensure fair treatment.

Senior management accountability

TCF reinforced senior management accountability for customer outcomes, with board-level oversight expected for material customer matters.

Common conceptual vocabulary

TCF gave UK financial services a shared framework for thinking about conduct. The six outcomes became the structure of compliance training, board reports, and customer journey design across the regulated population.

What TCF Got Wrong — The Limitations

Despite its strengths, TCF had material limitations that became increasingly apparent over the 17 years between its introduction and Consumer Duty:

The “outcomes-focused but not outcomes-tested” gap

TCF set out outcomes firms should deliver but the FCA’s supervisory approach was substantially principles-based rather than outcomes-tested. Firms could demonstrate TCF compliance through documented policies, training programmes, governance arrangements, and complaints data — without substantive testing of whether actual customer outcomes were good. Many TCF programmes documented intent without demonstrating delivery.

The loyalty penalty problem

Despite TCF being in force, large-scale loyalty penalty issues persisted across UK financial services — long-standing customers paying materially more than new customers for substantively the same products. TCF Outcome 5 (products performing as expected) and Outcome 6 (post-sale barriers) were engaged but enforcement action focused on specific firms rather than systemic patterns. The FCA’s 2018 super-complaint response and subsequent intervention on home insurance and energy supply pricing identified TCF’s structural limitation in addressing this pattern.

The vulnerable customer gap

TCF treated all retail customers with broadly similar obligations. The recognition that vulnerable customers required substantively different treatment came later — through FG21/1 in 2021 — and was not natively part of the TCF framework. See our Vulnerable Customers Guide.

Sludge and behavioural manipulation

TCF Outcome 6 addressed unreasonable barriers but did not robustly capture sludge practices — friction, complexity, and behavioural manipulation that obstructed customer interests without clear “barriers”. The recognition that customer journeys themselves could systematically disadvantage customers came later.

Communications meeting disclosure but not understanding

TCF Outcome 3 required clear information and appropriate communication. But “clear” was substantively interpreted as compliant disclosure rather than tested customer comprehension. Communications that met regulatory disclosure rules but obscured key information from typical customers were largely TCF-compliant.

The closed book problem

TCF applied to firms’ ongoing customer relationships but the supervisory focus was substantially on new business. Closed product books — historic relationships with poor product fit, unfair pricing, or weak support — were not robustly addressed.

Why Consumer Duty Was Needed

The FCA’s path to Consumer Duty included multiple market studies, supervisory observations, and policy developments demonstrating TCF’s structural limitations:

• The 2018 super-complaint on loyalty penalties
• Multiple sector-specific market studies (general insurance, mortgage, cash savings)
• Research on customer behaviour, sludge practices, and decision-making barriers
• Recognition of vulnerable customer patterns through Financial Lives Survey data
• The 2018 Approach to Consumers document setting out the FCA’s evolved thinking
• The November 2018 Consultation Paper (CP18/41) on a duty of care
• The May 2021 Consumer Duty consultation (CP21/13)
• The December 2021 second consultation (CP21/36)
• The July 2022 Policy Statement (PS22/9) introducing the regime

The cumulative case for Consumer Duty was that the substantive standard of customer outcomes UK financial services was delivering — particularly for vulnerable customers, less-engaged customers, and customers in closed product books — was not what TCF should have produced. A substantively higher and more directly-tested framework was needed.

What Consumer Duty Adds Beyond TCF

Consumer Duty addresses each of the structural TCF limitations through specific regulatory innovations:

For detail on these elements, see our Four Outcomes Guide, Cross-Cutting Rules Guide, and Vulnerable Customers Guide.

Does TCF Still Apply?

Principle 6 (treating customers fairly) remains in the FCA’s Principles for Businesses and TCF concepts continue to feature in the Handbook. But the operative substantive standard is Consumer Duty (Principle 12 + cross-cutting rules + four outcomes), which the FCA has been clear is meaningfully higher than the TCF standard.

Practical position in 2026:

• For new conduct programme design: design around Consumer Duty. TCF-aligned programmes are insufficient.
• For existing firm policies and training: TCF-aligned materials should be refreshed for Consumer Duty alignment
• For Conduct Rules (Tier 1) Rule 4 (“pay due regard to the interests of customers and treat them fairly”): this is now interpreted in light of Consumer Duty standards. See our Individual Conduct Rules Guide
• For ongoing FCA dialogue: the substantive frame is Consumer Duty

Practical Implications for Firms in 2026

For firms still adjusting from TCF-aligned to Consumer Duty-aligned operations, the practical priorities include:

Refresh culture and training

Update conduct culture programmes and training to reflect Consumer Duty standards. Materials referencing TCF outcomes alone should be updated to reflect the four Consumer Duty outcomes and three cross-cutting rules.

Build outcome MI

Where TCF compliance was demonstrated through inputs (training delivered, complaints below threshold, satisfactory customer surveys), Consumer Duty requires outcome MI — actual customer experience data, value realisation metrics, vulnerable customer outcome data.

Strengthen fair value analysis

Substantive fair value assessment was largely absent from TCF practice. Firms need to develop fair value methodologies appropriate to their products and customer segments.

Test customer comprehension

Customer testing programmes should move beyond legal review to substantive comprehension testing — particularly for material communications, renewal processes, and complex product features.

Address closed books

Closed product books require substantive review under Consumer Duty standards, not just continued operation under historic terms.

Embed vulnerable customer adaptation

Vulnerable customer frameworks should be integrated across all four outcomes — not just operating as a separate framework alongside the main customer journey. See our Vulnerable Customers Guide.

Strengthen board engagement

The annual Consumer Duty Board Report requires substantive board-level engagement with customer outcomes. TCF-era board reports that confirmed satisfactory operation without substantive engagement no longer suffice.

The Recruitment Implications

The shift from TCF to Consumer Duty has affected senior compliance recruitment substantially:

• SMF16 (Compliance Oversight) roles now require Consumer Duty implementation experience as a baseline criterion. See our SMF16 Guide
• Head of Conduct / Head of Consumer Duty roles have emerged in larger firms as dedicated specialist positions
• Vulnerable customer programme leads are increasingly common
• Fair value specialists bridging commercial pricing analytics with regulatory understanding are valuable
• Customer outcomes analysts focused on MI and outcome testing have grown as a specialism

The candidate pool with substantive Consumer Duty implementation experience has tightened materially since 2023. Firms recruiting senior conduct roles in 2026 should expect competitive markets and benchmark compensation accordingly.

Common Pitfalls in the TCF-to-Consumer-Duty Transition

Treating Consumer Duty as TCF refreshed. Consumer Duty is a substantively higher standard, not a rebrand of TCF. Firms that approached implementation as TCF-with-new-language frequently have inadequate frameworks.

Documenting compliance without operational change. TCF-era practice of documenting compliance through policies and training continues to be applied to Consumer Duty by some firms — but the FCA’s substantive testing approach makes this insufficient.

Inadequate outcome MI. Where TCF allowed input-based compliance demonstration, Consumer Duty requires outcome-based evidence.

Fair value as a compliance check rather than commercial analysis. Fair value assessment requires substantive analytical work — not a confirmation that pricing is “fair”.

Vulnerable customer framework as separate addition rather than integrated. Vulnerable customer adaptation should be integrated across products, prices, communications, and support — not run as a parallel programme.

Closed books not reviewed. Firms with material closed books need substantive review, particularly following the July 2024 extension.

Board engagement that’s pro-forma. Annual board reports that confirm satisfactory operation without substantive engagement fail the Consumer Duty standard.

Further Reading and Authoritative Sources

For the FCA’s authoritative guidance on Consumer Duty, see the FCA’s Consumer Duty pages. For the underlying Principles for Businesses (including Principle 6 — treating customers fairly — and Principle 12 — Consumer Duty), see PRIN in the FCA Handbook. For the substantive Consumer Duty rules, see PRIN 2A.

Related Guides: Consumer Duty and Conduct

Part of FD Capital’s series of practical guides for FCA-regulated firms: Consumer Duty — Pillar Guide | The Four Consumer Duty Outcomes | Cross-Cutting Rules & Principle 12 | Vulnerable Customers Under Consumer Duty | FCA Conduct Rules — Pillar | Individual Conduct Rules (Tier 1) | Senior Manager Conduct Rules (Tier 2) | SMF16 — Compliance Oversight Function