The Consumer Duty (Duty) is the FCA’s standard its expects firms to give to retail customers. It aims is to ensure consumers of retail financial products are better protected from current and new/emerging drivers of harm. All firms in the customer journey irrespective of whether you are a manufacturer or distributor of products will be impacted by the Duty.
In essence there are three main components to the Duty:
(1) Consumer Principle – this will be the 12th Principle which clearly states the requirement for firms “ to act to deliver good outcomes for retail customer”.
(2) Cross-Cutting Rules - these are three rules that aim to articulate the standard of conduct the FCA expects under Principle 12. They set out how firms should act (both proactively and reactively) to deliver a good outcome for customers. The rules require firms to:
(3) The Four Outcomes – these are a draft set of rules and guidance that sets more detailed expectations for firms conduct that represent key elements of the firm-consumer relationship. They differ depending on the firms role in the customer journey i.e. a manufacturer or distributor. The outcomes are as follows:
If they haven’t done so already firms need to start examining a number of things, such as:
Its starts with awareness, therefore if firms haven’t done so already, we would recommend the first step is for the Board and senior teams to be fully briefed on the Duty, the rules, requirements and expectations on firms, the most immediate being the implementation plan by the 31st October 2022.
We are able to offer group or one to one education sessions dependent on the firms requirements.