Consumer Duty at the FCA authorisation gateway: what applicants must evidence

What the Consumer Duty actually is

The Consumer Duty is set out in the FCA Handbook at PRIN 2A. At its centre is the Consumer Principle, Principle 12, which requires that a firm must act to deliver good outcomes for retail customers. This is a higher standard than treating customers fairly, because it focuses on the outcome the customer actually experiences, not only on the firm's process.

Underneath the Consumer Principle sit three cross-cutting rules that explain how a firm should act to deliver good outcomes. The FCA describes these as: acting in good faith towards customers; avoiding causing foreseeable harm, including identifying and mitigating risks before they materialise; and enabling and supporting customers to pursue their financial objectives. The cross-cutting obligations are contained in PRIN 2A.2, and the FCA states at PRIN 2A.2.26R that these obligations exhaust what is required under Principle 12.

The Duty then sets four retail customer outcomes, each with its own section of the Handbook. These are products and services (PRIN 2A.3), price and value (PRIN 2A.4), consumer understanding (PRIN 2A.5), and consumer support (PRIN 2A.6). Together the Consumer Principle, the cross-cutting rules, and the four outcomes form a single framework. An applicant that understands the framework, rather than treating it as four unrelated checklists, is already better placed at the gateway.

Why the Duty is a gateway matter, not a post-authorisation one

The FCA assesses applicants against the threshold conditions, the minimum standards a firm must meet to be authorised and to remain authorised. Part of that assessment is whether the applicant is ready, willing and organised to comply with the FCA's rules and guidance on an ongoing basis. The Consumer Duty is one of those rules. If a firm cannot show that it is organised to deliver good outcomes for retail customers, it has not demonstrated that it can comply, and that is a gateway problem.

The FCA is explicit on its guidance for applicants: if your firm is in scope of the Consumer Duty, your application must prove that you can comply with the Consumer Duty. It also tells applicants directly that they will need to show that they can meet the Consumer Duty if they are in scope. This is not an aspiration for later. It is a condition of getting through the gateway.

The context matters. The Duty has been in force for open products and services since 31 July 2023, so a new applicant is entering a market where the standard is already established. There is no transitional period for new entrants. Speaking on authorisations, the FCA's Executive Director of Authorisations Sheree Howard made clear in her April 2026 speech that the process works best when firms come well prepared, and that the FCA filters out firms that are not ready, that have poor governance, or that lack a genuine customer focus. Consumer Duty readiness is central to that customer-focus test.

The four outcomes and what an applicant must evidence

The four outcomes are where an assessor will look for concrete evidence rather than intent. Each outcome asks a different question about the firm-customer relationship, and each requires the applicant to show how its intended business model will deliver the outcome in practice, using its own products, its own target market, and its own systems.

The table below sets out the four outcomes, the underlying Handbook section, and the kind of evidence an applicant should be ready to put in front of the FCA. Note that the price and value outcome does not require the cheapest price. It requires fair value, meaning the price a customer pays is reasonable relative to the benefits they receive.

Embedding the Duty in the business plan and governance

The single most useful principle for an applicant is to weave the Consumer Duty through the operating documents rather than bolt it on as a separate paper. In its review of authorisation and registration applications, the FCA describes good practice as weaving the Consumer Duty throughout policies, procedures, systems and controls, rather than simply repeating its expectations of the Duty in a separate document. It identifies poor practice as firms that repeat the FCA's rules within their policies, rather than documenting how they intend to comply with those rules within their own setting.

In the business plan, that means the Duty should be visible where the firm describes its target market, its product design, its pricing, its communications and its customer support. An assessor reading the plan should be able to see how each of the four outcomes will be delivered by the model on the page, not by a generic compliance appendix. Financial resources and staffing matter here too: the FCA looks at whether the applicant has the people and the money to deliver on its commitments, and Duty commitments are no exception.

Governance is the other half. The FCA expects to see who owns Consumer Duty outcomes within the firm, how the board or senior managers will oversee them, and how the firm will monitor whether it is in fact delivering good outcomes once trading. A credible application shows the feedback loop: how outcomes are measured, who reviews the results, and what happens when the data shows customers are not getting good outcomes.

How to demonstrate readiness at the gateway

There is no separate Consumer Duty form at authorisation and no FCA-issued readiness checklist. The Duty is assessed through the evidence you already submit: the business plan, the governance arrangements, the policies, and the financial and staffing information. The task is to make Duty readiness legible across all of those, so an assessor does not have to hunt for it.

The steps below describe a practical sequence for building that evidence. Work through scope first, because a firm that is not in scope should say so and explain why, rather than producing Duty material it does not need. A firm that is in scope should then be able to trace a clear line from the Consumer Principle to concrete, testable arrangements.

Common weaknesses that hold applications back

The most common weakness is restating the rules. A policy that repeats the wording of PRIN 2A tells the FCA nothing about how the firm will comply. The FCA has flagged this directly as poor practice. The fix is to write about your own products, your own customers and your own controls, and to explain the mechanism by which each outcome will be delivered.

A second weakness is treating fair value as a price statement. The price and value outcome is about the relationship between price and benefit, so an applicant that simply lists its charges without assessing whether they are reasonable relative to the benefits has not addressed the outcome. A third weakness is a governance gap: strong outcome descriptions with no named owner and no monitoring plan. The FCA wants to see that the firm can keep delivering good outcomes after authorisation, which is a governance and data question as much as a policy one.

Finally, applicants sometimes submit draft or inconsistent documents. The FCA expects final versions that have been reviewed and signed off, and it expects consistency between the business plan, the policies and the financials. Consumer Duty claims in the business plan that are not reflected in the policies or resourced in the financials will undermine the whole application. Getting outside review before submission, whether internal or from a specialist adviser, is a sensible discipline given the standard the gateway now applies.

Conclusion

Consumer Duty readiness is now part of passing the FCA authorisation gateway, not a task to defer until after you are authorised. The FCA has been clear that in-scope applicants must prove they can comply with the Duty, and it assesses that through the ordinary application evidence: the business plan, governance, policies, financials and staffing. There is no runway for new entrants, because the Duty has applied to open products and services since 31 July 2023.

The applicants that do best treat the Consumer Duty as a design principle rather than a document. They map each of the four outcomes to their own products and target market, they evidence fair value with reasoning, they assign clear ownership, and they show how they will monitor outcomes and respond to harm. Do that consistently across the application and the Duty stops being a hurdle and becomes evidence that the firm is ready, willing and organised to run well. If you want structured support building that evidence, our authorisation service is designed around exactly this standard, and our compliance monitoring tools help you keep delivering good outcomes once you are trading.

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