PRIN 2A.2 – Cross-cutting Obligations

This section establishes three fundamental cross-cutting obligations that firms must demonstrate throughout all aspects of their retail market business. These obligations require firms to act in good faith, avoid causing foreseeable harm, and enable customers to pursue their financial objectives. These standards apply throughout the entire customer journey and product lifecycle, requiring firms to consider both target market needs and individual customer circumstances while accounting for behavioral biases and vulnerabilities.

Act in Good Faith

PRIN 2A.2.1R – Core Good Faith Requirement

Firms must act in good faith toward all retail customers. This represents a fundamental standard of conduct characterized by honesty, fair and open dealing, and acting consistently with customers’ reasonable expectations. Good faith forms the foundation of trustworthy customer relationships.

PRIN 2A.2.2G – Definition of Good Faith

Acting in good faith means conducting business with honesty, maintaining fair and open dealings, and consistently meeting the reasonable expectations that retail customers have of their financial services providers. This standard emphasizes transparency and integrity in all customer interactions.

PRIN 2A.2.3G – Examples of Bad Faith Conduct

Firms fail to act in good faith when they:

• Ignore retail customers’ interests in product design or information presentation
• Inappropriately manipulate or exploit customers by targeting their emotions or behavioral biases to mislead them or create artificial demand
• Take advantage of customers or their circumstances, particularly exploiting vulnerability characteristics in ways likely to cause harm
• Provide different service standards depending on whether activities benefit the firm versus the customer, without objective justification

PRIN 2A.2.4G – Commercial Interests and Good Faith

Acting in good faith does not prevent firms from pursuing legitimate commercial interests or seeking profits, provided they do so while complying with Principle 12 and PRIN 2A requirements. Good faith does not require firms to act in a fiduciary capacity where they were not already obligated to do so.

PRIN 2A.2.5R – Remedial Action Requirement

When firms identify through complaints, internal monitoring, or other sources that retail customers have suffered foreseeable harm due to the firm’s acts or omissions, they must act in good faith and take appropriate remedial action, including providing redress where appropriate.

PRIN 2A.2.6G – Exception for Inherent Product Risks

The remedial action requirement does not apply to harm caused by risks inherent in a product, provided the firm reasonably believed that retail customers understood and accepted those risks. This exception protects firms from liability for normal product risks that customers knowingly accept.

PRIN 2A.2.7G – Factors for Reasonable Belief

Whether a firm’s belief about customer understanding is reasonable depends on several factors including the product’s nature, the adequacy of product design and communications, customer service quality, retail customers’ needs and characteristics, and compliance with applicable laws including PRIN 2A rules.

Avoid Causing Foreseeable Harm

PRIN 2A.2.8R – Core Harm Prevention Requirement

Firms must avoid causing foreseeable harm to retail customers. This obligation applies to both actions and omissions, whether in direct customer relationships or through roles in distribution chains, even when other firms also contribute to potential harm.

PRIN 2A.2.9G – Comprehensive Harm Prevention

Avoiding foreseeable harm encompasses multiple areas of business activity. Firms must ensure that all aspects of product design, terms, marketing, sales, and support avoid causing foreseeable harm while ensuring business practices do not unfairly exploit behavioral biases or vulnerability characteristics.

PRIN 2A.2.10G – Specific Harm Prevention Requirements

Firms must actively work to prevent harm by:

• Ensuring comprehensive protection across all business aspects from design through ongoing support
• Avoiding unfair exploitation of customer behavioral biases or vulnerabilities
• Identifying potential harm from product withdrawals, changes, or evolving understanding of customer impacts
• Responding appropriately to emerging harm trends, including FCA supervisory actions and communications
• Taking mitigation actions such as updating product designs, improving information provision, removing unreasonable barriers, and supporting customers during product transitions

PRIN 2A.2.11G – Limited Scope for Point-in-Time Providers

Firms involved with products only at specific points in time without ongoing customer relationships need not act to avoid harm that only becomes foreseeable later. This provision recognizes practical limitations for firms with limited customer interaction.

PRIN 2A.2.12G – Boundaries of Harm Prevention

Firms are not responsible for preventing all possible harm. The requirement focuses on foreseeable harm rather than all potential negative outcomes, recognizing that some risks are inherent to financial products and services.

PRIN 2A.2.13G – Inherent Product Risk Examples

Products may carry inherent risks that customers accept by selection. When firms reasonably believe customers understand and accept such risks, they will not breach rules by failing to prevent related harm. Common examples include mortgage repossession risks and investment market movement risks leading to capital losses.

Enable and Support Retail Customers

PRIN 2A.2.14R – Customer Objective Support Requirement

Firms must enable and support retail customers to pursue their financial objectives. This obligation requires active assistance in helping customers achieve their goals rather than merely avoiding interference with customer plans.

PRIN 2A.2.15G – Understanding Customer Objectives

The conclusions firms can reach about retail customers’ financial objectives depend on the type of product provided. Different service types allow different assumptions about customer goals and require different levels of objective understanding.

PRIN 2A.2.16G – Execution-Only and Non-Advised Services

Firms providing execution-only or non-advised services can assume customers’ financial objectives involve purchasing, using, and enjoying full product benefits, unless they know or should reasonably know otherwise. This creates a practical presumption for transactional services.

PRIN 2A.2.17G – Advisory and Discretionary Services

Firms providing advisory or discretionary services may rely on objectives disclosed by retail customers unless they know or should reasonably know that disclosed information is manifestly outdated, inaccurate, or incomplete. This places responsibility on firms to recognize obviously problematic information.

PRIN 2A.2.18G – Legal Information Requirements

Information firms must obtain under legal provisions (including various COBS, ICOBS, MCOB, and CONC requirements) is relevant for determining whether firms knew or should have known about different customer financial objectives. This integrates existing regulatory requirements with Consumer Duty obligations.

PRIN 2A.2.19G – Specific Objective Support

When firms become aware of specific financial objectives sought by retail customers in connection with products, they should consider how to support progress toward achieving those objectives in customer interactions. This requires responsive, customer-focused service delivery.

PRIN 2A.2.20G – Comprehensive Customer Empowerment

Enabling and supporting customers includes empowering them to make good choices by ensuring all business aspects meet customer objectives, providing necessary information and support for informed decisions, enabling product enjoyment and reasonable switching or exit options, and accounting for behavioral biases and vulnerability characteristics.

PRIN 2A.2.21G – Support During Product Declination

When firms decline to provide particular products to retail customers, they may need to proactively provide information or support. Firms should consider providing helpful information aligned with customer financial objectives and ensure any third-party information they provide is independent and reliable.

PRIN 2A.2.22G – Reasonable Standards Boundary

Enabling and supporting customers does not require firms to exceed what a prudent firm conducting the same activities with the same products would do, taking appropriate account of retail customer needs and characteristics. Firms need not go beyond what customers reasonably expect in product delivery.

Implementation Guidance

PRIN 2A.2.23G – Comprehensive Application

These cross-cutting obligations apply throughout all customer journey stages and the complete product lifecycle. Firms must regularly review products and consider the impact of any changes, ensuring consistent application of good faith, harm prevention, and customer support principles.

PRIN 2A.2.24G – Target Market and Individual Application

The obligations apply both at target market level and individual customer level depending on context. Individual interactions require individual-focused application, while product design and pricing decisions require target market-focused application.

PRIN 2A.2.25G – Behavioral and Vulnerability Considerations

Each cross-cutting obligation requires firms to understand and account for cognitive and behavioral biases, vulnerability characteristics, and knowledge limitations that affect retail customers’ needs and decisions. This ensures customer-centered approaches throughout business operations.

PRIN 2A.2.26G – Relationship to Principle 12

These cross-cutting obligations define how firms should act to deliver good outcomes for retail customers under Principle 12. They provide concrete guidance for implementing the overarching Consumer Duty principle in practical business contexts.