What Is Consumer Duty and How Does It Protect Commercial Finance Borrowers?

Introduced by the Financial Conduct Authority, Consumer Duty came into force at the end of July 2023, and it represents one of the more significant shifts in UK financial regulation in recent years. But its protection for commercial finance borrowers specifically isn't quite as simple as "it covers everyone", it depends on the type of finance and the nature of the borrower, and understanding that nuance matters if you want to know exactly what protection you're actually entitled to.

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What is Consumer Duty?

Consumer Duty is an FCA regulatory standard requiring regulated firms to deliver good outcomes for retail customers across four key areas: the products and services themselves, price and fair value, consumer understanding, and consumer support. Rather than simply avoiding harm, firms are required to actively demonstrate they're delivering genuinely good outcomes, not just meeting a minimum bar of acceptable conduct.

Does Consumer Duty apply to all commercial finance borrowers?

Not automatically, and this is worth understanding clearly rather than assuming blanket coverage. Consumer Duty applies to a firm's retail market business, and "retail customer" is a broader category than the general public, it can include SMEs, micro-enterprises, and, depending on the specific regulated activity involved, sole traders and smaller business borrowers too. However, the Duty generally does not apply to unregulated commercial or wholesale lending, and it specifically does not extend to large business mortgage customers or SME lending that falls outside FCA-regulated credit activities.

In practice, this means whether Consumer Duty protection applies to a specific commercial finance borrower depends on the exact type of finance being arranged, and whether that particular activity falls within FCA-regulated scope, rather than being a blanket guarantee across every kind of business lending.

Where does Consumer Duty most clearly apply in commercial finance?

Generally, where the finance activity itself is FCA-regulated and the borrower meets the relevant "retail customer" definition for that specific type of product, commonly including sole traders, micro-enterprises, and certain smaller business borrowers depending on the regulated activity involved, regulated mortgage contracts being one clear example.

Where does it typically not apply?

Consumer Duty generally doesn't extend to unregulated commercial or wholesale lending, or to larger business borrowers whose finance falls outside FCA-regulated credit activities altogether. A large, established company arranging a substantial unregulated commercial loan sits in a genuinely different position to a sole trader or micro-enterprise taking out finance that falls within FCA-regulated scope.

What are the four outcomes Consumer Duty actually requires, where it applies?

Products and services. Designed to meet the genuine needs of the target customer group, not simply designed for profitability with the customer as an afterthought.

Price and value. Customers should receive fair value for what they're paying, not simply whatever the market will bear regardless of what's actually being delivered.

Consumer understanding. Communications need to be clear, and genuinely understandable to the customer, not technically accurate but practically confusing.

Consumer support. Customers should be able to get the help they need, when they need it, throughout the life of the product or service, not just at the point of sale.

Why does this matter for how a broker operates, even beyond strict legal scope?

Because many firms, including those operating in commercial finance more broadly, choose to apply Consumer Duty principles as good practice across their business, even in areas that fall technically outside the Duty's strict regulatory scope. A broker genuinely committed to treating customers fairly tends to apply similar standards, clear communication, fair value, genuine support, consistently, rather than drawing a hard line exactly where legal obligation stops.

How does this connect to being "FCA regulated" more broadly?

FCA regulation and Consumer Duty aren't quite the same thing, a firm can be FCA regulated while some of its specific activities sit outside Consumer Duty's precise scope. That said, firms genuinely committed to treating customers fairly as a principle, not just a legal minimum, tend to reflect Consumer Duty's underlying spirit, clear communication, fair value, genuine support, across their business generally, rather than only where strictly legally required.

What should you check as a commercial finance borrower?

A few things worth confirming with any broker or lender:

- Whether the specific type of finance you're arranging falls within FCA-regulated activity

- Whether you, as a borrower, would meet the "retail customer" definition relevant to that specific product

- Whether the firm applies fair treatment principles consistently, regardless of the precise legal boundary

The mistake people often make

Some assume Consumer Duty provides blanket protection across every type of commercial finance, only to discover later that a specific large or unregulated commercial lending arrangement sits outside its strict scope. Understanding the actual boundary, regulated activity and retail customer status, rather than assuming universal coverage, gives a genuinely accurate picture of where legal protection applies.

The bottom line

Consumer Duty requires FCA regulated firms to deliver good outcomes across products, price, understanding, and support, but its application to commercial finance borrowers depends on whether the specific activity is FCA-regulated and whether the borrower meets the relevant retail customer definition, it doesn't blanket-cover every type of business lending. Money Pilot's regulatory content covers this in more depth, reflecting its position as an FCA regulated broker committed to treating customers fairly, both within Consumer Duty's strict legal scope and as a broader operating principle across its business.

Disclosure: Money Pilot Ltd (FRN: 968705) is an Appointed Representative of Yellow Stone Finance Group Ltd which is authorised and regulated by the Financial Conduct Authority (FRN: 814533). Yellow Stone Finance Group Ltd is a credit broker not a lender. Money Pilot Ltd is Registered in England and Wales No: 13621432. You should always make sure you are able to afford any repayments as late or missed payments can affect your credit rating and access to future finance.

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