Consumer duty

This communication is intended for intermediaries distributing Vanguard’s products or services. Understand how Vanguard has implemented the Consumer Duty, including key information about our obligations as a manufacturer.


The Consumer Duty sets higher expectations for the standards of care that firms must provide to retail customers, moving to a regime that is outcomes-focused to help ensure they receive the support they need, communications they can understand, and products and services that meet their needs and offer fair value.

The Duty is comprised of the following components: 

  • New Consumer Principle 12.
  • Cross-cutting rules which explain how firms should act to deliver good outcomes. 
  • Four outcomes which set out more detailed expectations in four key areas that represent key elements of the relationship between the firm and the consumer.

The Financial Conduct Authority (FCA) expects firms to put retail customers at the heart of their business by providing products and services that are designed to meet customer needs, with a key focus on those with vulnerable characteristics. This includes reviewing and testing products, undertaking value assessments, selecting distribution arrangements appropriate for the defined target market and ensuring customers receive support relevant to aid their understanding. Importantly, firms must monitor customer outcomes and, where appropriate, may be required to provide redress where harm is identified.

Vanguard’s approach to Consumer Duty

The principles of the Duty are consistent with Vanguard’s core purpose, which is “to take a stand for all investors, to treat them fairly and to give them the best chance for investment success”. Vanguard’s business model1  is centered on putting clients at the heart of what it does, meaning there is close alignment between the aims of the Duty and the way in which Vanguard serves customers every day.  

How has Vanguard implemented the Duty to date?

Vanguard already has a strong focus on customer outcomes, and as such many of its existing processes are aligned to the standards set by the Duty. There are some areas in which Vanguard has made enhancements to its processes in light of the Duty requirements and to ensure the four outcomes are appropriately embedded in its business:

(i) Price & value outcome: there must be a reasonable relationship between the price paid for a product or service and the overall benefit a customer receives from it. As such, Vanguard has undertaken additional assessments and/or reviews where appropriate to ensure all existing open products and services continue to provide fair value for money to retail consumers.

Further details of Vanguard’s assessments of how its existing open products and services provide fair value for money can be found here.

The outcomes of the completed value assessments for our UK-domiciled funds will continue to be disclosed in the annual Assessment of Value report and in the European MiFID Template (EMT V4.1) which also include outcomes for our Ireland-domiciled funds. The outcome of tour value assessments for model portfolio services will continue to be made available directly to Vanguard's primary distributors via a seperate communication. 

(ii) Products & services outcome: the design of products and services must be regularly reviewed to make sure they meet the needs, characteristics and objectives of customers in the identified target market, and that their intended distribution strategies remain appropriate for customers within that market. 

Vanguard has an established process for regularly reviewing its products and services. In line with the Duty, it completes reviews for all existing open products and services which include aspects of the product design, approval, testing and assessment of target market and related distribution arrangements.

Further details of Vanguard’s reviews of existing products and services can be found here.

(iii) Consumer understanding outcome: communications should support and enable customers to make informed decisions about financial products and services and give them the information they need, at the right time, and presented in a way they can understand.

Vanguard is focused on ensuring its communications: (a) are effective in delivering good customer outcomes across all channels, (b) enable retail customers to make informed decisions by selecting products that help them to pursue their financial objectives and (c) are designed in a way to support understanding by different types of retail customers, including customers who may have characteristics of vulnerability. 

(IV) Consumer support outcome: customer service levels should enable customers to realise the benefits of the products and services they buy and ensure they are supported when they want to pursue their financial objectives.

Vanguard is developing further its framework to ensure our consumer support: (a) meets customer needs across all channels, (b) meets the needs of customers with consideration given to different groups of customers with different needs, including those with characteristics of vulnerability, including using feedback loops across the Distribution chain, (c) captures post-sale and pre-sale interactions, to enable consumers to pursue their financial objectives.

Timeline and dates 

Consumer Duty implementation timeline         
Action Date                 
Consumer Duty implementation plans approved by boards  Complete
Manufacturers to share information with distributors on open products and services  Complete
Ensure Consumer Duty compliance in respect of open products and services Complete

Frequently asked questions 

The Duty applies to all firms providing regulated financial services activities in the UK where they can determine or materially influence retail customer outcomes. Importantly, the requirements apply across the distribution chain, including where firms may not have a direct relationship with the retail customer. As a result, asset managers and those firms that distribute funds must collaborate and share information in order to ensure that they comply with the Duty and ultimately deliver good outcomes for their retail customers.

In its capacity as manufacturer, Vanguard, under the Duty, must develop products and services that meet the needs, characteristics and objectives of an identified target market of customers. Vanguard must make sure that its products provide fair value to customers and that its distribution strategy is appropriate in view of the identified target market for its products and services.

Vanguard must also make sure that customer communications support and enable investors to understand its products and services, their features and risks and offer appropriate levels of customer service. Vanguard must review its products regularly to assess whether they meet the needs of the target market, offer fair value and have been distributed appropriately. Across all of these areas, the FCA expects firms to demonstrate adherence to the cross-cutting rules and with special regard paid to the treatment of different groups of customers, including those with vulnerable characteristics, when assessing whether customers are experiencing good outcomes.

Vanguard will be provided the outcomes of its product reviews, including assessment of target market and the outcome of its assessments of fair value by the FCA milestone of 31 April 2023.  

Along with many other asset managers, Vanguard is working closely with industry bodies and trade associations that represent both asset managers and distributors to develop a common standard for the content and format of the information that will be shared along the distribution chain. Vanguard has actively engaged in and is supportive of these industry discussions which should serve to provide a common industry-wide approach to information exchange in a way that will reduce the burden on both distributors and manufacturers. 

Vanguard will continue to provide information to its distributors on all Vanguard products and services made available to retail customers via distributors in the UK, including model portfolio services, UK and Ireland-domiciled UCITS funds. The Vanguard Irish UCITS domiciled fund range includes both mutual funds and ETFs.

Distributors must make sure that their own products and services – for example, the platforms or advisory services – meet the needs, characteristics and objectives of a target group of customers. They must make sure that their own charges provide fair value and that their distribution strategy is appropriate to the intended target market, as well as providing appropriate levels of customer service and support.

In addition, distributors must consider whether the third-party products that they distribute are likely to result in good outcomes for their customers. For example, distributors should ensure that a product’s target market is taken into account when distributing a product and ensure that their distribution arrangements are consistent with the product providing fair value to retail customers. 

As with the information that Vanguard will provide to distributors, Vanguard has been working with industry bodies and trade associations that represent both manufacturers and distributors to develop a common standard for the content and format of the information that will be requested from its distributors. 

Vanguard expects sub-distributors of its products – those with whom there is no direct contractual relationship, but which form part of the distribution chain for retail customers – to have understood and implementated the Duty as it impacts them in line with the 31 July 2023 due date.

Vanguard does not intend to request information directly from sub-distributors. However, it expects much of the information that it will request from distributors to be informed by the due diligence and oversight arrangements put in place by its distributors over the sub-distribution chain. Vanguard expects those sub-distributors to continue to work collaboratively with other parties in the distribution chain to engage with requests for information and respond to these requests in a timely manner so that data can be shared along the distribution chain.

Vanguard’s approach for receiving information from distributors, will be aligned to the Joint Trade Association Manufacturer/ Distributor Feedback Framework.  Vanguard encourages all distributors to familiarise themselves with the agreed structure of the framework and operational processes that may be required to meet the proposed timelines and data points that will be requested by manufacturers. 

It is understood that the data points will span six key areas comprising (i) sales data by distribution strategy; (ii) sales outside the target market by distribution strategy; (iii) redemption by holding period; (iv) distribution issues; (v) complaints data; and (vi) poor outcomes experienced by clients.  The mechanisms for sharing this information will entail quantitative and qualitative datasets.  The quantitative data which applies to the first three data points is intended to be delivered periodically using a standardised template, and anticipated to cover an eight month period to the end of March 2024 with subsequent reports to be provided at six-monthly intervals thereafter. Qualitative data which applies to the last three data points is expected to be provided to manufacturers as and when specific events arise, with precise mechanisms still to be clarified.

Vanguard will continue to participate and monitor the of the Joint Trade Association Group and anticipates communicating further as outcomes are defined.  Vanguard encourages distributors to also monitor these developments to help ensure they are prepared and fully aligned with the industry expectations for sharing information with Vanguard.

Glossary of terms 

Descriptions from relevant parts of the Duty:

Primary distributor: Platforms that are a distributor and contractual party of Vanguard’s products and services.

Sub distributor: Those with whom there is no direct contractual relationship, but which form part of the distribution chain for retail customers. Examples would include an IFA, DFM or platform acting through a sub-distribution chain.

Distributor: A firm which offers, sells, recommends, advises on, arranges, deals, proposes or provides a product.

Distribution chain: Firms that are involved in the manufacture, provision, sale and ongoing administration and management of a product or service to the end retail customer.

Manufacturer: A firm that creates, develops, designs, issues, manages, operates, or carries out a product or service.

1. Rather than being publicly traded or owned by a small group of individuals, The Vanguard Group, Inc. is owned by Vanguard’s US-domiciled funds and exchange traded funds (ETFs). Those funds, in turn, are owned by their investors. While we cannot replicate this structure in Europe, we believe that this unique mutual structure aligns Vanguard’s interests with those of our investors globally and drives the culture, philosophy and policies throughout the Vanguard organisation worldwide. 

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.


Important information

This document is directed at professional investors and should not be distributed to, or relied upon by retail investors.

This document is designed for use by, and is directed only at persons resident in the UK.

The information contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so.

The information in this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions.

The information contained in this document is for educational purposes only and is not a recommendation or solicitation to buy or sell investments.

Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.

© 2023 Vanguard Asset Management Limited. All rights reserved.