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Consumer Duty


Consumer Duty:

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.


What does the Duty comprise of?

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: 

  • Act in good faith with retail customers
  • Avoid causing foreseeable harm to retail customers
  • Enable and support retail consumers to pursue their financial objectives


 (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:

  • Products and Service – ensuring the design of the product meets the needs, characterises, and objectives of customers in the identified target market.
  • Price & Value – ensuring firms assess whether their products or services provide fair value to a customer. This aims to address the issue of firms offering products or services which are unfair or poor value thereby potentially leading to foreseeable harm. 
  • Consumer Understanding – ensuring firms communications enable and support customer understanding of their products and services and to enable customers to make informed decisions.
  • Consumer Support – ensuring firms provide the level of support (throughout the relationship) that meets customers’ needs and allows them to pursue their financial objectives.


What do firms need to do?

If they haven’t done so already firms need to start examining a number of things, such as:         

  • Education/Briefings – Are the Board, senior managers and stakeholders aware of the new requirements – what they mean for the firm etc.
  • Distribution Chain – Understand where the firm’s products or services are in the distribution chain, and mapping out the customer journey (in detail).
  • Gap Analysis - Conducting a gap analysis against the new standards and rules.
  • Culture – The FCA are keen to drive the message about having the right culture that perpetuates a truly customer centred approach. How does the firm’s culture measure against this? How does an customer centred culture flow down to senior manager conduct, processes, procedures, QA etc.  How can everyone be bought in?
  • Governance & Accountabilities – How will this impact on product governance and senior manager accountabilities?
  • Firm-Wide Training – Planning a training programme for all leaders, managers and teams on the Duty but what it means for them in their role. There will also be a 6th conduct rule, so firms and staff will need to know what that means as well!


How can Paul Harper Consulting help?

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. 

01761 252 536