What is Consumer Duty and what does it mean for collections?

Collections and recovery can be some of the most difficult moments in a customer relationship.

A customer may be worried about missed payments, unclear about what they owe, dealing with a change in income, or trying to find support before the situation gets worse. The way a company communicates, responds, and records those interactions matters.

This is why Consumer Duty is relevant to collections.

The FCA’s Consumer Duty sets higher standards of consumer protection for firms within its scope. It requires firms to act in good faith, avoid foreseeable harm, and enable and support retail customers to pursue their financial objectives. It also sets four outcomes covering the key parts of the firm-customer relationship: products and services, price and value, consumer understanding, and consumer support.

For collections teams, Consumer Duty doesn't create a separate set of “collections rules.” It sits alongside existing FCA requirements, including the Consumer Credit sourcebook, or CONC, and it changes the way firms need to think about customer outcomes across the full credit lifecycle.

This guide explains what Consumer Duty means in collections and recovery, where it affects day to day processes, and what collections leaders should review.

As always, this article provides general information only and isn't legal advice. Consumer Duty applies to firms, products, and services within its scope. Firms should assess their responsibilities with appropriate legal, compliance, risk, and operational stakeholders.

What is the FCA Consumer Duty?

Consumer Duty is the FCA’s framework for raising the standard of care firms provide to retail customers.

It includes:

• A Consumer Principle, which requires firms to act to deliver good outcomes for retail customers
• Three cross-cutting rules, which require firms to act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives
• Four outcomes, which focus on products and services, price and value, consumer understanding, and consumer support
  

The Duty applies across the customer journey. For collections and recovery teams, this matters because customers in arrears or financial difficulty may need clear information, accessible support, and a treatment path that reflects their circumstances.

Consumer Duty doesn't replace CONC or other FCA rules. It sits alongside them. Firms still need to meet the specific requirements that apply to their business and consider how their collections processes affect customer outcomes in practice.

Why Consumer Duty matters in collections and recovery

Collections activity can affect customers at a time when they're under financial pressure.

A customer may need help understanding their account, discussing payment options, disputing a balance, reporting a change in circumstances, or accessing support. If the process is unclear, difficult to access, or disconnected from the information the firm already holds, the customer may struggle to take the right next step.

Consumer Duty encourages firms to look beyond whether a process is technically available. They need to consider whether customers can understand it, use it, and get appropriate support when they need it.

For collections teams, that can mean reviewing:

• How customers are told about arrears, payments, and next steps
• Whether information is clear, accurate, and easy to act on
• How customers ask questions, raise disputes, or request support
• Whether people in financial difficulty can access the right help
• How vulnerability or changing circumstances affect treatment
• Whether payment arrangements, fees, interest, or other account actions are managed fairly and in line with applicable rules
• How complaints, disputes, and exceptions are handled
• What evidence the firm has about the outcomes customers experience

Consumer Duty doesn't require every customer to have a completely individualized process. It does require firms to consider customer needs and avoid one-size-fits-all processes where they could create foreseeable harm.

The four Consumer Duty outcomes in collections

The four outcomes provide a useful way to review collections processes. They're connected, and firms should consider them alongside the cross-cutting rules.

Products and services

The products and services outcome focuses on whether products and services are designed to meet the needs, characteristics, and objectives of customers in the target market.

Collections teams are often dealing with customers after a credit product has already been sold. Even so, collections can reveal whether the product, the customer journey, and the support process are working as intended.

For example, firms may need to consider:

• Whether customers can access support when they fall into arrears
• Whether the collections process reflects the type of product and customer involved
• Whether payment arrangement and forbearance processes are clear and appropriate
• Whether recurring problems in collections point to issues earlier in the product lifecycle
• Whether third parties handling collections understand the relevant customer and product context

The aim isn't to redesign a product during a collections call. It's to make sure collections insights feed back into product, risk, and customer support decisions where relevant.

Price and value

The price and value outcome requires firms to provide fair value. In a collections context, this can be relevant to the way firms manage charges, interest, fees, payment options, and the wider cost of holding or resolving a debt.

The right questions will depend on the product and customer circumstances. Collections teams shouldn't assume that a standard approach will always be appropriate.

Useful questions include:

• Are customers given clear information about their balance, charges, interest, and payment options?
• Do account actions reflect the firm’s policies and applicable requirements?
• Are customers in financial difficulty able to access the right support route?
• Are payment arrangements and forbearance processes applied consistently?
• Are collections insights helping the firm identify recurring customer outcome issues?

Consumer Duty doesn't prescribe a single payment plan, interest rate, or fee structure for every customer. Firms remain responsible for making decisions in line with their product terms, regulatory obligations, and customer outcome responsibilities.

Consumer understanding

Customers need information they can understand and act on.

In collections, this includes more than sending a compliant letter or message. It means making sure customers can identify the account, understand the amount due, see what options are available, and know how to ask for help or challenge information.

Collections teams should review whether communications:

• Explain the account and next steps clearly
• Use plain, accessible language
• Give customers enough information to make informed decisions
• Make payment, dispute, and support routes easy to find
• Work across the channels customers are actually using
• Stay consistent across letters, email, SMS, self service, and agent conversations
• Reflect the latest account status, payment arrangement, dispute, or support need

The FCA’s Consumer Duty materials emphasize that firms should support consumer understanding, not simply provide information. This distinction matters in collections, where a customer may be under stress or may need extra time or support to understand the options available.

For a deeper look at this area, see our guide to Consumer Duty and collections communications.

Consumer support

Consumer support is often the outcome that collections teams feel most directly.

The FCA expects firms to provide support that meets retail customers’ needs, including customers with characteristics of vulnerability. Firms should make it easier for customers to get the help they need and avoid creating unreasonable barriers to support.

This can include reviewing:

• Whether customers can reach the right team without unnecessary delays or repeat contact
• Whether support is available through appropriate channels
• How customers disclose financial difficulty, vulnerability, or a change in circumstances
• Whether staff have clear escalation routes and training
• Whether self service options are easy to use and supported by a route to human help
• How the firm works with authorized representatives, debt advisers, and third parties
• Whether the customer’s circumstances change the treatment path where appropriate

Self service can be useful for customers who want to manage an account independently. It is not a replacement for human support when a customer needs help, has accessibility needs, is in financial difficulty, or has a complex question.

For more detail, read our guide to FCA vulnerable customer guidance for collections teams.

What the cross-cutting rules mean for collections

The cross-cutting rules give collections leaders a useful test for day to day decisions.

Act in good faith

Collections communications and processes should be honest, clear, and designed to help customers understand their position and available options.

This means avoiding messaging or processes that create unnecessary confusion, hide important information, or make it difficult for a customer to get help.

Avoid foreseeable harm

Firms should consider where a collections process could create harm that they could reasonably anticipate.

Examples may include:

• Continuing standard activity after a customer has disclosed a serious change in circumstances
• Using communication that customers are unlikely to understand
• Making it difficult to access support or raise a dispute
• Failing to connect account information across teams or channels
• Using a process that works for most customers but repeatedly causes problems for a defined group

The right response depends on the situation. The important point is that firms should identify predictable problems and take reasonable steps to reduce them.

Enable and support customers to pursue their financial objectives

In collections, this can mean helping customers understand their options, access support, and make informed decisions about resolving an account.

It doesn't mean a firm is required to provide financial advice in every interaction or guarantee a particular outcome. It means firms should not create unnecessary barriers when a customer is trying to understand their position, ask for help, or take an appropriate next step.

What Consumer Duty changes in day to day collections

Consumer Duty can affect ordinary collections processes, not just board reporting or compliance reviews.

Collections leaders should look at the points where customers are most likely to need clarity, support, or a change in treatment.

That includes:

• Early arrears communications
• Payment reminders and missed payment workflows
• Payment arrangements and broken arrangements
• Digital self service journeys
• Agent interactions and call guidance
• Vulnerability and hardship disclosures
• Disputes, complaints, and account queries
• Third party agency handoffs
• Escalation and legal action processes

A useful question is: If a customer’s circumstances changed today, would the next action change with them?

If the answer is no, the process may be relying too heavily on manual notes, disconnected systems, or one size fits all workflows.

Questions collections leaders should ask

Consumer Duty is easier to manage when leaders ask practical questions about the customer journey.

• Can customers understand the information they receive about their account?
• Can they find and use the support options available to them?
• Are communications clear across every relevant channel?
• Are customers in vulnerable circumstances identified and supported appropriately?
• Do payment, dispute, and complaint processes work consistently?
• Are third-party agencies and service providers working to the same standards?
• Can teams see the information they need before making contact?
• Are customer outcomes monitored, not just process completion?
• Do recurring complaints, repeat contacts, or failed journeys point to a wider problem?
• Can the firm show what it changed after identifying an issue?

The answers can help teams move from a broad Consumer Duty statement to a process that works in practice.

Consumer Duty is an ongoing responsibility

Consumer Duty isn't a one time implementation project.

Customer needs change. Products change. Communication channels change. New issues emerge through complaints, vulnerability disclosures, quality assurance, and operational data.

Firms need to keep reviewing whether their processes are producing the outcomes they expect. This includes looking at how customers experience collections, where they get stuck, what information they need, and whether support reaches the people who need it.

For collections leaders, the work often starts with a clear view of the customer journey, defined ownership of key processes, and the ability to make controlled changes when an issue appears.

For a more detailed implementation approach, read how to build a Consumer Duty compliance strategy for collections.

Humanize your processes and enhance customer centricity with Debt Manager

Providing your customers with the four benefit-focused outcomes of the Duty is no small order. You need a compliant collections and recovery platform that seamlessly integrates with your existing systems to be efficient, effective and fast when dealing with different accounts and situations.

C&R Software’s industry leading Debt Manager platform hosts a range of features that humanizes the customer journey at each step. It has complete omnichannel support that integrates with ML and AI-powered tools to automate treatment paths and payment offers to customers based on their characteristics and account data. This directly results in providing customers with offers that benefit them in a fast and efficient manner, while also providing agent contact when needed for additional guidance.

To find out more about how Debt Manager can help you fulfill the four benefit-focused outcomes of the Duty and humanize your collections process, contact us today.