Almost a year ago, a Cabinet minister did something rare in UK financial services.

He poked the regulator.

Out loud. 

On breakfast television. 

(Awkward, right?).

He asked whether Consumer Duty (the FCA’s flagship “put customers first” regime) was helping the economy, or sitting on it like an overzealous chaperone.

At the time, it was written off as political theatre, and everyone went back to pretending the question had been settled.

(News flash: it hadn’t).

Consumer Duty is now fully baked. The compliance spend is sunk. The processes are live. The governance decks are laminated. And the uncomfortable question is still there, just wearing noise-cancelling headphones.

How do you protect consumers in a traditional, tightly regulated sector without turning innovation into a controlled substance? How do you stop “playing it safe” from becoming the only rational strategy?

That’s the tension worth reopening.

Let’s break it apart.

Consumer Duty launched in 2023 with main-character energy.

The FCA wasn’t asking for better disclosures. It wanted good outcomes. A full moral reboot of financial services, minus the slow-motion origin story montage (with, let’s be real here, several skeletons best left in the closet). 

Firms complied with new frameworks, new governance and new teams whose entire job is to explain what they’ve already explained, and with it, Consumer Duty stopped being an idea and became permanent furniture.

Then reality set in.

And the furnishings were less Herman Miller, and more discount selection at The Range.

Within a year, regulation shot to the top of advisers’ concern lists, while consumers reported…. ehhhh… not much difference, including more than four in five vulnerable customers, who were meant to benefit most. Instead of better service, many got chatbots and call-centre roulette.

The dream, right? 

That gap, between effort and effect, is why Consumer Duty keeps reappearing in the conversation.

Consumer Duty doesn’t ban innovation, but it does make it tiring.

Once every decision has to be defensible in hindsight, firms optimise for safety. New ideas slow down. Risk appetite shrinks. The safest option becomes the default, not because it’s best, but because it’s easiest to explain later.

Financial services only move forward by trying new things. When caution becomes the organising principle, markets flatline.

It’s the Marvel effect. Early phases take risks. Later phases play it safe, follow the formula, and wonder why the man in tights isn’t bringing in the big bucks.

That’s the collision: protection doing its job so well it starts squeezing out momentum.

The maths isn’t great.

When Consumer Duty was challenged in early 2025, Jonathan Reynolds relayed a story from industry: one insurer said implementation cost around twenty times the original impact assessment. A full-blown “who approved this?” moment.

Regulation shot to the top of the worry list almost overnight, with Consumer Duty doing most of the heavy lifting. Compliance stopped being a cost of doing business and started acting like the business.

And the payoff?

Most consumers say nothing feels better. Among vulnerable customers (the headline act) 81% report no improvement at all. In fact, instead of warmer service and clearer outcomes, many are being routed to chatbots that can apologise fluently but in the end, solve very little.

It’s the financial services equivalent of buying organic, free-range eggs and opening the carton to be greeted by dirty ping-pong balls and a note that just says, “SIKE!”.

A lot of spend. A lot of effort. And not much of a result.

Consumer Duty has clear winners.

Big incumbents cope just fine. They have the teams, the budget, and established product lines. For them, compliance is manageable, sometimes even a competitive moat.

Challengers feel it harder. New products and new models attract more scrutiny by default. Proving “good outcomes” is toughest where experimentation still exists.

Consumers? Confident ones barely notice. The rest often get safer, simpler, more limited options.

The real losers are invisible: the ideas that never made it past committee.

Consumer Duty isn’t the villain. Complacency is.

Protecting consumers and growing markets aren’t opposites; but when regulation optimises only for safety, everything else gets treated like a liability. Firms design for defensibility. Innovation gets second-guessed. The safest answer wins by default.

Over time, that doesn’t protect consumers. It bores them.

A market that never evolves quietly taxes everyone in it. Returns flatten, engagement drops, and participation stagnates. Consumers are “protected” into apathy. Safe, but underwhelmed.

Consumer Duty was meant to raise the floor.

The job now is making sure it doesn’t lower the ceiling.