The Consumer Duty, or “The Duty”, is a new set of standards which have been created by the Financial Conduct Authority (FCA) to improve consumer protection and build more trust across the whole spectrum of financial services in the UK.
The Principle
At the heart of the Duty, there lies an overriding Consumer Principle:
A firm must act to deliver good outcomes for retail clients
This is supported by three cross cutting rules, and four customer outcomes:
Three Cross-Cutting Rules
A firm must act in good faith towards retail customers.
A firm must avoid causing foreseeable harm to retail customers.
A firm must enable and support retail customers to pursue their financial objectives.
Four Consumer Outcomes
This outcome is focused on ensuring products and services are designed with a clear target market in mind, and the customers’ needs, characteristics and objectives are documented.
This outcome aims to ensure that all customers pay a fair price for the product or service they receive and that the price paid is reasonable compared to the overall value and benefit they receive.
This outcome requires firms to provide clear information so that customers can make informed decisions about financial products and services.
This outcome is focused on ensuring that customers have sufficient support and information to meet their needs throughout their relationship with a firm.
FCA Guidance
the FCA set out its policy statement and final rules for Consumer Duty in July 2022. For more details and additional information see the sections below.
Feedback to CP21/36 and final rules is available from the FCA as a policy statement PDF here.
In this episode of the Inside FCA Podcast focusing on the Consumer Duty, Ozge Ibrahim speaks with technical specialist, Alex MacDermott, about how the Duty affects firms seeking authorisation. Alex talks about what firms will need to demonstrate in their application, why the FCA is asking for information in advance of the implementation deadline and the implications for firms who don’t meet the requirements.
In this episode in a series of Inside FCA Podcast interviews on the Consumer Duty, the FCA’s Manager of Consumer Policy, Richard Wilson, speaks to Ozge Ibrahim about the detail behind the products and services outcome, which is designed to ensure all products and services for consumers are fit for purpose. Listen to Richard explain the detail behind the outcome, the FCA’s expectations — including how firms should test target markets — and the importance of identifying vulnerable customers.
In this episode of a dedicated series on the Consumer Duty, the FCA’s Manager of Consumer Policy, Richard Wilson, talks with Ozge Ibrahim about the consumer understanding outcome (one of the 4 outcome rules in the Consumer Duty), to explain why it’s necessary, our expectations on tailoring and testing of firm communications, and how this applies proportionally. He also outlines what firms should be doing to monitor and evidence understanding and ensure they are ready for implementation of the Duty in July 2023.
In this episode of a dedicated series on the Consumer Duty, FCA policy expert Sean Cafferky talks to Ozge Ibrahim about the principles behind the consumer support outcome, its impact on the channels of support firms should offer, what we mean by ‘sludge’ and ‘appropriate friction’, and how firms should review their customer journeys to help achieve good outcomes for consumers.
