FCA SYSC + Consumer Duty¶

In one sentence¶

The FCA's "how you must run your firm" rulebook (SYSC) plus the outcomes- based duty to act in retail customers' interests (Consumer Duty FG22/5, PS22/9) — together they shape what a regulated UK firm has to do around any customer-facing AI agent.

Who does it apply to?¶

UK firms authorised by the FCA (banks, insurers, brokers, wealth managers, payment institutions, e-money institutions, consumer credit firms, etc.).
Some specific obligations also apply to firms regulated only by the PRA via the "approved persons" / "Senior Managers and Certification Regime."

If your agent helps a retail customer with a financial decision and your firm is FCA-authorised, you are in scope. Wholesale-only firms have a lighter Consumer Duty footprint but still owe SYSC.

The two-minute explainer¶

Two layers.

SYSC is a section of the FCA Handbook covering Senior Management Arrangements, Systems and Controls. It is not AI-specific; it predates AI agents by 25 years. Its core demands are: senior people are accountable (SYSC 4), systems and controls are proportionate to the business (SYSC 6, SYSC 13), records are kept (SYSC 9), outsourcing is governed (SYSC 13.9). When the FCA looks at an AI deployment, it applies SYSC to it: who's accountable, what controls exist, what records are kept, how the outsource to the LLM provider is governed.

Consumer Duty (FG22/5 and PS22/9, in force from 2023) is newer and outcome-focused. Firms must deliver good outcomes for retail customers across four cross-cutting outcomes: products and services, price and value, consumer understanding, consumer support. There's a separate duty for vulnerable customers. The Duty replaced a checklist mindset with an evidence-of-outcomes mindset — you have to be able to show outcomes, not just procedural compliance.

For an AI agent, the question becomes: does this agent help or hurt the four outcomes? A retention-bot that confuses customers or upsells inappropriately fails Consumer Duty even if it ticks SYSC boxes.

What it actually requires of an engineer¶

Senior Management attribution (SYSC 4 + SMCR). Every consequential action should be traceable to an SMF holder ("This action falls under SMF24's responsibility"). The audit needs SMF in the event.
Outsourcing governance (SYSC 13.9). The LLM provider is an outsource. Records of why it was chosen, what alternatives exist, exit plan, audit rights. Operational paperwork; Regulus surfaces the technical state.
Record-keeping (SYSC 9). Most records 5 years; MiFID-relevant records 7 years. Audit retention must match.
Four-outcomes alignment (Consumer Duty). Per-agent justification showing which of the four outcomes the agent supports and how. Audit needs the outcome on the event.
Vulnerable-customer protection. Agents handling vulnerable customers need enhanced controls. Flag the customer in invocation context and route through dual-control / HITL.

What Regulus does for you¶

RegulusAuditPlugin emits smf_holder, consumer_duty_outcome, vulnerable_customer_flag, fca_lei on every event when the fca-sysc profile is active.
RegulusPolicyPlugin produces RequireConfirmation when vulnerable_customer=true is in the invocation context, mapping to ADK ToolConfirmation (HITL).
Retention is set to 5 years (raw) + 7 years (summary) — covers SYSC 9 and MiFID II.
The fca-sysc profile pins europe-west2 for UK-only firms by default; override via YAML for firms with EU establishments.
The RegulusModelRiskPlugin materiality tier (REGULATED / HIGH_RISK) feeds into SYSC's proportionality test.

Saves you ~¶

SMF-aware audit pipeline: ~2 engineer-weeks.
Consumer Duty outcome tagging + reporting view: ~3 engineer-weeks.
Vulnerable-customer routing into dual-control: ~1.5 engineer-weeks.
Outsourcing register integration (regulator-facing exports): ~2 engineer- weeks.

Total: ~8.5 engineer-weeks, plus tracking FCA Dear CEO letters and Consumer Duty interpretations.

Code: minimal¶

regulus:
  compliance:
    profiles: [fca-sysc]

Code: production¶

regulus:
  compliance:
    profiles: [fca-sysc, pra-ss1-23, uk-gdpr]
  adk:
    audit:
      sink: kafka
      kafka-topic: audit.fca.v1
    kill-switch:
      enabled: true
      dual-control: true
    model-risk:
      tenant-tier: REGULATED
    residency:
      allowed-regions: [europe-west2]
      require-cmek: true

In Java, with explicit per-request tags:

PolicyContext context = new PolicyContext(
    "retail-mortgage-advice",                   // purposeCode
    customerId,                                  // subjectId
    "user:" + sessionUser.getId(),               // actor
    "model",                                     // targetKind
    "gemini-2.5-pro",                            // targetId
    Map.of(
        "smf_holder", "SMF24:Jane Smith",
        "consumer_duty_outcome", "support",
        "vulnerable_customer", String.valueOf(isVulnerable),
        "fca_lei", "213800ABC123"
    ));

RegulusPolicyPlugin reads vulnerable_customer=true and short-circuits to RequireConfirmation — the agent pauses for HITL approval before proceeding.

How to verify¶

Invoke with vulnerable_customer=true → audit shows RequireConfirmation with citation FG22/5 §4.
Pull a sample event: smf_holder, consumer_duty_outcome, fca_lei present and populated.
Trip the kill switch → next request KillSwitchActive; deactivation needs two SMF holders (configurable to require SMF identity on the operator).
Retention check: audit topic configured for 5+ years; compaction task scheduled.

What an auditor will ask¶

"Who is responsible for this AI system?" SMF holder per event; reference to the firm's SMCR records.
"What does Consumer Duty look like in your evidence?" Outcome tagging per event; outcome-grouped dashboard.
"How do you protect vulnerable customers?" Flagging path + HITL demo + audit attribution to the confirming operator.
"Show me your outsourcing register entry for the LLM provider." Off- Regulus but linked from the audit pipeline.
"Demonstrate kill-switch operation." Activation drill, dual-control deactivation drill, post-incident audit reconstruction.

What this doesn't cover¶

SMCR identity management. Your IDP / HR system holds SMF mappings; Regulus records them on events but doesn't manage them.
MiFID II transaction reporting. Different regulator interface; not in scope.
Retail conduct rules (COBS, ICOBS). Behavioural rules about how products are sold; we record the agent's action, you ensure the product flow satisfies COBS.
Operational resilience under SS1/21 + FG21/3. Some overlap with our audit + kill switch, but the resilience programme as a whole is a separate workstream.

Framework mapping¶

NIST AI RMF — SYSC 4 (senior management) ↔ GOVERN-2.1. SYSC 13 (outsourcing) ↔ GOVERN-6.1. Consumer Duty FG22/5 ↔ MEASURE-2.8.
NIST 600-1 GenAI Profile — Consumer Duty vulnerable-customer flows align with GAI-7 (human-AI configuration).
ISO/IEC 42001 — SYSC 4 ↔ A.3.2. SYSC 9 (records) ↔ A.6.2.7. SYSC 13 ↔ A.10.3. Consumer Duty intended use ↔ A.9.2.

Citations¶

FCA Handbook SYSC — https://www.handbook.fca.org.uk/handbook/SYSC/
SYSC 4 — Senior Management Arrangements.
SYSC 9 — Record-keeping.
SYSC 13 — Operational risk; outsourcing.
FG22/5 — Final non-Handbook Guidance for firms on the Consumer Duty.
PS22/9 — Policy Statement implementing the Consumer Duty.
Senior Managers and Certification Regime — FCA Handbook SUP / SYSC.