The Consumer Duty
The FCA wants to see firms doing more to protect customers from harm in retail financial markets. To address this, it is introducing a new consumer duty that will set higher expectations for the standard of care that firms provide to customers and goes beyond the FCA’s current set of Principles and rules.
The consumer duty will consist of a new consumer principle that will be supported by cross-cutting rules and guidance. Both of these will be underpinned by further rules and guidance relating to four outcomes that represent key elements across the whole firm-consumer relationship.
What is the Consumer Duty?
There will be three elements to the consumer duty:
New consumer principle. The new Principle 12 will state “A firm must act to deliver good outcomes for retail clients”.
Cross-cutting rules. These will support the consumer principle by setting clear expectations for firms’ cultures and behaviours.
The “four outcomes”. This is a suite of other rules and guidance linked to four particular outcomes that represent the key elements across the whole firm-consumer relationship. The outcomes relate to the quality of firms’ products and services, the price and value of products and services, consumer understanding and support for consumers.
Improving outcomes for consumers is a priority for the FCA. It is concerned that, due to the way financial services markets operate, consumers do not always get the products and services that meet their needs or the outcomes they might reasonably expect and this can lead to harm.
How FM Legal can help implement the Duty in your business
FM Legal can support your firm’s Consumer Duty implementation team by:
- Carrying out e-money and payment product reviews to ensure compliance with the cross-cutting rules
- Identify any gaps in the firm’s current practices and provide solutions for any existing gaps
- Advising on best practices in terms of e-money and payment product design
- Review and amendment of customer-facing documentation to ensure compliance with the cross-cutting rules
- Advising on and providing a tailored monitoring programme to ensure ongoing compliance
- Drafting reports, policies and procedures to document your firm’s compliance with the Duty
Final Rules: Consumer Duty PS22/9
FCA review of firms’ implementation plans
FCA Podcast: price and value
The Consumer Duty sets higher and clearer standards of consumer protection across financial services, and requires firms to put their customers’ needs first.
The Consumer Duty will set higher and clearer standards of consumer protection across financial services and require firms to act to deliver good outcomes for customers.
The FCA expects firms to assess their products and services, to ensure there is a reasonable relationship between the price paid for a product or service and the overall benefit consumers get from it.