The Consumer Duty has applied to electronic money institutions (EMIs) and payment institutions (PIs) since 31 July 2023 for products open to sale, and since 31 July 2024 for closed products. EMIs and PIs are authorised under the Electronic Money Regulations 2011 and the Payment Services Regulations 2017 rather than FSMA, but the FCA applies Principle 12 and PRIN 2A to their payment and e-money services for retail customers.
For payment and e-money services, a retail customer includes consumers, micro-enterprises and small charities. That is wider than many firms assume, and a business account provider serving small companies is often within scope for part of its customer base. This article sets out how the Duty works for payment businesses; the general framework is covered in the firm's Consumer Duty compliance guide for 2026.
The Duty has three parts: the Consumer Principle (Principle 12), three cross-cutting rules and four outcomes. It applies across the product lifecycle, from design and distribution to post-sale support and exit.
The FCA has published three pieces of work that set out its expectations for payment businesses specifically.
| Publication | Date | Main findings |
|---|---|---|
| Payments Consumer Duty multi-firm review | 9 October 2024 | Of 23 firms, just under half had only partially implemented the Duty |
| International payment pricing transparency | 1 May 2025 | Exchange rate mark-ups and intermediary fees often not shown before commitment |
| Payments firms and vulnerable customers | 17 September 2026 | Some firms identified very few or no vulnerable customers |
The October 2024 review covered e-money issuers, merchant acquirers, money remitters and open banking firms. It found target markets set too broadly, weak fair value assessments that relied on price benchmarking alone, little testing of communications, limited oversight of agents, and boards that showed little challenge. Building reliable management information was the largest challenge, and many firms had changed their pre-Duty MI very little. E-money customers often complained about a lack of communication when accounts were frozen.
Principle 12 requires firms to act to deliver good outcomes for retail customers. It is Principle 12 of the FCA's Principles for Businesses, supported by the detailed rules in PRIN 2A, and for in-scope retail business it sets a higher standard than Principles 6 and 7.
For a payment firm, Principle 12 means understanding how customers actually use the product, how the product performs for them, and where outcomes are poor. It requires processes to identify and address poor outcomes, and regular self-challenge of whether the firm's products, prices and service meet the standard.
Deal with customers honestly and openly, and do not exploit their lack of knowledge. In payments, that means fee schedules and exchange rate costs that customers can find and understand, contract terms that are not buried, and remuneration and incentive structures that do not reward poor outcomes.
Consider pricing, value and risk from the design stage. Monitor for harm using management information, complaints, FCA publications and customer feedback. Common sources of foreseeable harm in payment businesses include unexplained account freezes, dormancy fees, unclear foreign exchange costs, and misunderstandings about how customer funds are protected.
Help customers navigate the information they receive, test whether communications work, and make sure support channels do not stop customers using the product as intended. Switching, closing an account and withdrawing funds should be straightforward.
Products must be designed for an identified target market and distributed to it. The FCA's 2024 review found payment firms' target markets were generally too broad, and that medium and higher-risk products need narrower definitions.
Many payment firms reach customers through agents and e-money distributors. The FCA expects firms to monitor their agents' compliance with the Duty in practice, not only to onboard and train them. Mystery shopping, complaint analysis by agent and outcome data by channel are practical ways to evidence this.
Firms must show that customers receive fair value: a reasonable relationship between the total price paid over the relationship and the benefits received. The assessment should weigh features, quality and limitations against all charges, including transaction fees, foreign exchange mark-ups, card fees, dormancy or inactivity fees and account closure costs.
The FCA's May 2025 findings on international payment pricing set out what good disclosure looks like before a customer commits to a currency conversion.
| Show before commitment | Why it matters |
|---|---|
| Amount sent in GBP and exchange rate used | The customer can compare providers |
| Mark-up above the reference rate, explained as a cost | A mark-up should never be presented as a zero-cost transfer |
| Fixed and variable fees, and total fees in GBP | The customer sees the full price |
| Amount the recipient receives in local currency | The customer knows the outcome of the payment |
| Possible intermediary or recipient bank fees | The customer is not surprised by deductions |
Customers can only make good decisions if communications equip them to. Information should be provided at the right time, in a form customers understand, and tailored to the channel and the customer where the firm knows their circumstances.
The FCA's 2024 review found little pre-testing of payment firms' communications and noted that email open rates were being used as a measure, although they say nothing about understanding. Firms should test key communications before use, through comprehension testing or customer panels, and monitor understanding afterwards through complaint themes and contact reasons.
E-money and payment accounts are not covered by the Financial Services Compensation Scheme. Customer funds are protected by safeguarding instead, under the CASS 15 rules that have applied since 7 May 2026. Communications should explain this clearly and never imply FSCS protection. The firm's guide to the CASS 15 safeguarding regime explains how the protection works.
Customers should be able to use the product as they expected, get help when they need it, and switch or leave without unreasonable barriers. Post-sale support should be as good as pre-sale support, and leaving should be at least as easy as joining.
Payment firms often have to restrict accounts for fraud, financial crime or safeguarding reasons. These decisions should follow a documented process, be resolved as quickly as the investigation allows, and be communicated as clearly as the law permits. Where tipping-off rules prevent the firm explaining the reason, it can still confirm the account is under review and give a route for contact. The firm's article on payment institution financial crime controls covers how to balance the two obligations.
The FCA's September 2026 findings on payments firms noted that around half of UK adults show at least one characteristic of vulnerability, yet some payment firms identified very few or none. Stronger firms:
Firms that reach customers through intermediaries should monitor complaints and outcomes for those customers and engage with the intermediaries on vulnerability. Payment customers are also frequent targets of authorised push payment fraud, and support for scam victims, including under the APP reimbursement rules in force since 7 October 2024, is part of good consumer support.
The board of an EMI or PI must review and approve, at least annually, an assessment of whether the firm is delivering good outcomes. The report should be built on outcome monitoring, show where outcomes are poor or differ between customer groups, and set out what the firm has done and plans to do. It is not submitted to the FCA but must be available on request.
The FCA's 2024 review found that board minutes in payment firms showed little challenge of Duty implementation, and that some remuneration policies had not been tested for foreseeable harm. Stronger firms used RAG-rated board MI linked to the four outcomes.
| Outcome | Example MI for a payment firm |
|---|---|
| Products and services | Customers outside the target market; product usage by segment |
| Price and value | Fees and FX costs per customer; dormancy fees charged |
| Consumer understanding | Contacts about unexpected charges; comprehension test results |
| Consumer support | Time to resolve account restrictions; time to close an account |
EMIs and PIs are not under the Senior Managers and Certification Regime, so accountability for the Duty should be set out in the firm's governance arrangements and role descriptions. A board-level Consumer Duty champion helps keep outcomes on the board's agenda.
Buckingham Capital Consulting carries out Consumer Duty reviews for EMIs and PIs, rebuilds fair value assessments and outcome MI, and supports board report preparation and remediation. For firms applying for a UK EMI licence or a payment institution licence, the Consumer Duty framework is built into the application. Details are on the firm's Consumer Duty page.
Yes. The FCA applies Principle 12 and PRIN 2A to the payment and e-money services of EMIs and PIs for retail customers, from 31 July 2023 for open products and 31 July 2024 for closed products.
Principle 12. It is the Consumer Principle in the FCA's Principles for Businesses, supported by the detailed rules in PRIN 2A.
For payment and e-money services, retail customers include consumers, micro-enterprises and small charities.
In its October 2024 review of 23 payments firms, just under half had only partially implemented the Duty, with weaknesses in target markets, fair value, communication testing, agent oversight and board challenge.
Before the customer commits, show the exchange rate, any mark-up above the reference rate as a cost, all fees in GBP and the amount the recipient will receive.
No. E-money and payment account funds are protected by safeguarding under CASS 15, and communications should not imply FSCS protection.
Yes. The board must review and approve an annual assessment of whether the firm delivers good outcomes, and keep it available for the FCA on request.
Buckingham Capital Consulting has obtained FCA e-money and payment institution authorisations for firms including Dzing Finance, Hryze, HFS and Oval since 2013, building their Consumer Duty frameworks and fair value assessments as part of the application. It also carries out Consumer Duty reviews, MI design and board report support for authorised EMIs and PIs.
Speak to an expert: WhatsApp +44 7563 115980, Telegram @buckinghamcapital or info@buckinghamcapitalconsulting.co.uk.
This article is general information, reviewed against the regulator’s published requirements on the date shown. It is not legal advice; the regulator’s current publications take precedence.