Consumer Duty came into force on 31 July 2023, and its influence on R06 has been growing with every sitting since. It's not tested as a standalone topic. You won't see a question that says "explain Consumer Duty." Instead, it's woven into the fabric of the case study, subtly shaping what the examiner expects from your answers. And candidates who recognise this and reference it appropriately are picking up marks that others leave behind.
What Consumer Duty actually is
Consumer Duty is the FCA's overarching standard for firms providing financial services to retail customers. It replaced the previous Treating Customers Fairly (TCF) framework with something more specific and more demanding.
At its core, Consumer Duty requires firms to act to deliver good outcomes for retail customers. It's built on a Consumer Principle, "A firm must act to deliver good outcomes for retail customers", supported by three cross-cutting rules:
- Act in good faith toward retail customers
- Avoid causing foreseeable harm to retail customers
- Enable and support retail customers to pursue their financial objectives
These cross-cutting rules are then applied across four outcomes:
The four outcomes
- Products and services, products must be designed to meet the needs of the target market and distributed appropriately
- Price and value. The price customers pay must be reasonable relative to the benefits they receive
- Consumer understanding, communications must be clear, fair, and not misleading, enabling customers to make informed decisions
- Consumer support, customers must receive the support they need, when they need it, without unreasonable barriers
How Consumer Duty appears in R06
Consumer Duty doesn't appear as a labelled question in R06. Instead, it influences the type of answer the examiner expects. Here's where it shows up most often.
Ongoing suitability and annual reviews
The "annual review" question appears in almost every R06 sitting, and Consumer Duty has raised the bar for what examiners expect here. It's no longer sufficient to list generic review items. The examiner wants to see that you understand the ongoing duty to ensure the advice remains suitable.
Points that score well:
- "The annual review should confirm that the recommended products continue to meet the client's needs and objectives, in line with the firm's obligations under Consumer Duty"
- "Any changes in the client's circumstances, income, health, family situation, risk tolerance, should be assessed to ensure the existing arrangements still deliver good outcomes"
- "Fund performance should be reviewed against appropriate benchmarks to confirm the investment is providing fair value relative to the charges being applied"
That last point, fair value, is pure Consumer Duty territory, and examiners are increasingly looking for it.
Fair value assessments
When the case study presents a client with existing products, particularly ones with high charges, poor performance, or features the client doesn't use. The examiner expects you to assess whether the product is delivering fair value.
A weak answer: "The client's fund has high charges."
A strong answer: "The client's actively managed fund has an OCF of 1.45% and has underperformed its benchmark by 2.3% annually over three years. Given that a passive alternative tracking the same index is available at 0.15%, the current arrangement does not appear to offer fair value. Switching to a lower-cost alternative would improve the net return to the client without materially changing the risk profile."
The second answer assesses value, compares alternatives, and recommends action, all aligned with Consumer Duty's price and value outcome.
Vulnerability
Consumer Duty places specific emphasis on vulnerable customers. In R06, vulnerability can appear in several forms:
- Health conditions. A client with a serious illness or disability may need different advice or communication approaches
- Recent bereavement. A newly widowed client may be making financial decisions under emotional stress
- Low financial literacy. A client who doesn't understand investment concepts may need simpler product recommendations and clearer explanations
- Age-related factors. An elderly client may have cognitive decline affecting their decision-making capacity
If the case study contains any of these indicators, the examiner expects you to acknowledge the vulnerability and explain how it affects your advice.
For example: "Given that Margaret was recently bereaved and is making significant financial decisions for the first time, particular care should be taken to ensure she fully understands the recommendations. It may be appropriate to allow additional time for decision-making and to provide written summaries of the advice for her to review at home. Under Consumer Duty, the firm has a heightened obligation to support vulnerable customers in pursuing their financial objectives."
That paragraph demonstrates Consumer Duty awareness, identifies the vulnerability, and explains its practical impact. It's worth at least two marks.
Product governance and target market
When recommending a product, Consumer Duty requires that the product is designed for and distributed to the appropriate target market. In R06, this means your recommendations should demonstrate that the product is suitable for the client, not just in terms of their financial needs, but in terms of whether the client falls within the product's intended audience.
This is particularly relevant for more complex products:
- Drawdown, is the client comfortable managing investment risk? Do they have the financial literacy to understand how drawdown works? If not, a simpler alternative (like an annuity or blended approach) might be more appropriate
- Investment bonds, are the tax benefits relevant to this client, or would a simpler wrapper achieve the same outcome with lower charges?
- Structured products, does the client understand the conditions under which they might lose capital?
You don't need to write a paragraph about product governance for every recommendation. But if the case study presents a scenario where there's a question about whether a product is appropriate for the client, acknowledging the target market consideration shows Consumer Duty awareness.
How to weave Consumer Duty into your answers
The most effective approach is to treat Consumer Duty as a lens through which you view every recommendation, rather than a standalone topic. Here are practical ways to do this:
1. Use Consumer Duty language naturally
Phrases like "delivering good outcomes", "fair value", "ongoing suitability", and "acting in the client's best interest" signal to the examiner that you're aware of the regulatory context. You don't need to quote the FCA handbook, just use the language where it's relevant.
2. Always justify value
Whenever you recommend a product or assess an existing arrangement, consider whether it offers fair value. If the charges are high, the performance is poor, or the features don't match the client's needs, say so, and explain why a change would deliver better outcomes.
3. Flag vulnerability when you see it
If the case study includes any vulnerability indicators, acknowledge them. Explain how the vulnerability affects your advice approach and what additional steps should be taken to support the client.
4. Connect ongoing reviews to outcomes
In annual review questions, go beyond listing items to review. Explain why the review matters in terms of ensuring the client continues to receive good outcomes from the advice they were given.
5. Don't overdo it
Consumer Duty awareness should enhance your answers, not dominate them. A brief, well-placed reference scores marks. A long essay about the regulatory framework wastes time and doesn't score additional marks.
The marks on offer
Consumer Duty won't single-handedly pass or fail your R06 exam. But in a paper where candidates regularly fall just short of the pass mark, a few well-placed Consumer Duty references can provide the extra marks that make the difference.
The examiners are looking for evidence that you understand the regulatory environment in which financial advice is given. Candidates who demonstrate that awareness, through language, through value assessments, through vulnerability recognition, consistently score higher than those who write in a regulatory vacuum.
Consumer Duty isn't a box-ticking exercise for the R06 exam, and it shouldn't be treated as one. It's a genuine shift in how the FCA expects financial advice to be delivered, and the CII examiners are reflecting that shift in how they mark the paper. If you can think about good client outcomes naturally, not as an add-on but as the foundation of every recommendation. Your R06 answers will be stronger, more relevant, and more likely to hit the marks the examiner is looking for.