FCA Consumer Duty and AI: A Practical Compliance Guide

The FCA Consumer Duty requires firms to deliver good outcomes for retail customers. When AI systems are involved in customer-facing decisions, from credit scoring to product recommendations, the Duty creates specific governance obligations.

Where AI Meets Consumer Duty

Any AI system that influences customer outcomes is within scope. This includes automated credit decisions, chatbot interactions, personalised pricing, claims processing, and product recommendation engines.

Demonstrating Good Outcomes

Firms must be able to demonstrate that their AI systems produce fair, transparent, and explainable outcomes. This requires governance infrastructure that captures the decision-making process, enables human oversight, and provides audit evidence.

The FCA has signalled that enforcement activity will increase through 2025-2026, particularly where firms cannot demonstrate adequate governance of AI-driven decisions.