You may have seen the phrase "fair value" or references to the Consumer Duty in insurance news, and wondered what they mean for you. They are part of a stronger set of rules on how firms must treat customers. This guide explains Consumer Duty and fair value in plain English, and why they matter.
What the Consumer Duty is
The Consumer Duty is a set of rules, introduced by the financial regulator, requiring firms that provide financial products and services, including insurance, to act to deliver good outcomes for their customers. It raised the standard expected of firms, going beyond simply not treating customers unfairly, to a positive duty to put customers' interests at the heart of how products are designed, priced, sold and serviced. It came into force in 2023.
What fair value means
A central part of the Consumer Duty is fair value. Firms must carry out fair value assessments to show that the price a customer pays for a product is reasonable compared with the overall benefits the customer can expect to receive. In other words, a product should be worth what it costs. This does not mean everything must be cheap, but it does mean the price should bear a sensible relationship to the value provided.
Why it matters to you
Fair value rules matter because they give the regulator a basis to challenge products that cost a lot but deliver little, and to press firms to improve them. For customers, this means more protection against poor-value products and a stronger expectation that what you buy is worth the price. It shifts some of the responsibility onto firms to demonstrate value, rather than leaving customers entirely to fend for themselves.
Fair value in action
The fair value rules have had real effects. They underpinned the regulator's scrutiny of products where only a small share of premiums was paid out in claims, such as certain add-ons, as our guide to GAP insurance explains, and its examination of the cost of paying monthly, as our guide to premium finance explains. In both cases, the rules prompted firms to change products or cut costs, to consumers' benefit.
Good outcomes, not just fair prices
The Consumer Duty is about more than price. It also covers products and services suiting the customers they are aimed at, communications that customers can understand, and support that helps customers when they need it, including those in vulnerable circumstances. So the duty addresses the whole experience, from how a product is designed and explained to how a firm helps you when you claim or complain, not just whether the price is fair.
What it does not do
The Consumer Duty does not guarantee that every product is cheap, that you cannot buy poor value if you do not shop around, or that firms will always get it right. It raises the standard and gives the regulator tools to act, but you still benefit from comparing and choosing carefully, as our guide to why shopping around still pays explains. It strengthens your protection without removing the value of being an informed customer.
How to use it to your advantage
Knowing about the Consumer Duty helps you expect more and speak up when something falls short. If you feel a product offers poor value, or a firm has not treated you fairly, you can raise it, and ultimately complain, knowing the rules are on the side of good customer outcomes. Combined with shopping around and reading your policy, an awareness of fair value makes you a more confident, better-protected customer.
Who the Consumer Duty applies to
The Consumer Duty applies to firms providing financial products and services to retail customers, which includes insurers, brokers and others involved in selling and servicing insurance. This broad scope means the duty covers much of the chain between you and your cover, not just the insurer. The aim is that everyone involved in providing you with a financial product plays their part in delivering good outcomes, rather than responsibility falling through the gaps between firms.
Communications you can understand
One strand of the Consumer Duty concerns communications. Firms must provide information that customers can understand, supporting informed decisions, rather than burying key points in jargon or small print. For insurance, this means clearer explanations of cover, prices and terms. While policies remain detailed, the expectation is that the important things are communicated understandably, which helps you make better choices and reduces the chance of nasty surprises arising from something you were never clearly told.
Support for vulnerable customers
The Consumer Duty places particular emphasis on customers in vulnerable circumstances, whether through health, life events, low financial resilience or other factors. Firms are expected to take account of vulnerability and provide appropriate support, so that vulnerable customers are not disadvantaged. This matters in insurance, where vulnerable customers may need extra help understanding cover or making a claim, and the duty pushes firms to ensure they get it rather than being left to struggle.
The cross-cutting rules
Underpinning the Consumer Duty are broad expectations that firms act in good faith towards customers, avoid causing foreseeable harm, and enable customers to pursue their financial objectives. These cross-cutting rules colour everything a firm does, from designing products to handling claims and complaints. They set a tone of putting the customer's interests genuinely into the firm's thinking, rather than treating fair treatment as a box-ticking exercise, which is the shift the duty was intended to bring about.
What changed for customers
For customers, the Consumer Duty has meant a higher baseline of protection and some tangible improvements, from the scrutiny of poor-value products to clearer expectations on support and communication. It does not replace your own vigilance, but it tilts the system further towards good outcomes. Knowing the duty exists helps you recognise when a firm has fallen short and gives you firmer ground to stand on if you need to challenge how you have been treated.
An informed customer benefits most
The Consumer Duty strengthens the protection around you, but it works best alongside your own informed choices. Knowing that firms must deliver fair value and good outcomes, you can expect more, question poor value, and complain with confidence when something falls short. Combined with shopping around and reading your policy, that awareness makes you a more confident customer who is well placed to get genuinely good value and fair treatment.
In short
The Consumer Duty, in force since 2023, requires financial firms, including insurers, to act to deliver good outcomes for customers. Its fair value element means a product's price should be reasonable compared with the benefits it provides. The rules have prompted real improvements, from add-on products to the cost of paying monthly. They raise the standard and strengthen your protection, but shopping around and choosing carefully still pay.
Where to get help and next steps
Read our guides to why shopping around still pays and paying monthly, and on poor value add-ons see GAP insurance. This is general information, not financial advice.