The FCA's Consumer Duty, which came into force in July 2023, represents the most significant shift in UK retail financial services regulation in a generation. It moves the regulatory standard from 'treating customers fairly' to 'delivering good outcomes for retail customers.'
For many UK financial firms, this has raised questions about client gifting — is it compliant? Does it create conflicts of interest? Does it count as an inducement? This guide addresses those questions directly.
This is general information only and does not constitute legal or regulatory advice. Always consult your compliance function or legal advisers for guidance specific to your firm.
What Consumer Duty Actually Requires
Consumer Duty sets out four outcomes that regulated firms must deliver: products and services that meet clients' needs; fair value; consumer understanding (clients must understand what they're getting); and consumer support (clients must be able to act in their interests).
The overarching standard is that firms must act to deliver 'good outcomes' for retail customers. The question for gifting is: does a client appreciation gift help or hinder the delivery of good outcomes?
Where Gifting Creates Risk Under Consumer Duty
Gifts create regulatory risk when they obscure the value exchange, create a conflict of interest, or could influence a client's product or service decisions. Specifically: a gift given before a recommendation is made could be seen as influencing the client's decision. A gift tied to a specific product could be seen as an inducement. A gift that creates a sense of obligation might impair a client's ability to challenge advice.
These risks are real but manageable. The key is separating appreciation gifting from the advice and recommendation process.
Where Gifting Aligns With Consumer Duty
Genuine appreciation vs. commercial inducement
A gift given after a matter is concluded — after a policy is placed, after an investment is made, after a plan is implemented — is not connected to the advice process and therefore does not create the conflicts described above.
In fact, genuine client appreciation gifting aligns well with Consumer Duty's consumer support outcome. It demonstrates that the firm values the client relationship beyond the commercial transaction, which supports clients' confidence in engaging with the firm.
The FCA has been clear that the Consumer Duty is about substance, not form. Firms that genuinely care about client outcomes — and can demonstrate this through the client experience they provide — are exactly what the duty is designed to encourage.
Client appreciation gifts given after transactions are completed, not tied to specific product decisions, and documented in your firm's conflicts policy are generally well-positioned under Consumer Duty — provided they don't create obligations that impair client decision-making.
What Your Compliance Policy Should Say
Most FCA-regulated firms need a documented gifts and hospitality policy. For client gifting, the policy should cover: the annual per-client gift limit (many firms set £50–£100); the requirement that gifts are not made in connection with a pending recommendation; the requirement to log all gifts above a de minimis threshold; and who must approve gifts above the standard limit.
A standardised digital gifting platform like CustoThanks simplifies compliance significantly: every gift is logged, the amount is consistent, and delivery is traceable. This makes the compliance documentation straightforward.
Practical Guidance for UK Financial Advisers
Post-completion gifts (after a pension transfer, ISA setup, mortgage recommendation) are the lowest-risk scenario. The advice has been given, the product implemented, and the gift is clearly retrospective appreciation.
Annual review gifts are the next-lowest risk — they're tied to the ongoing relationship, not a specific product decision. Keep the value modest and consistent across the client bank.
Avoid: gifts immediately before or during an advice process, gifts of unusually high value to specific clients, or gifts that could be seen as connected to a specific recommendation outcome.
Consumer Duty doesn't prohibit client gifting — it simply requires firms to think carefully about when, why, and how they gift. A well-implemented client appreciation programme is entirely consistent with the duty's objectives and, if anything, reflects the kind of genuine client care the FCA is trying to promote.
Document your policy, keep gifts post-completion and at appropriate values, and you'll have a gifting programme that's both compliant and genuinely valuable to your client relationships.
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