2022: The FCA’s consumer duty is a new set of rules and guidance that aims to improve the standards of consumer protection in the financial services sector. The consumer duty requires firms to act in the best interests of their customers and deliver good outcomes for them.
The consumer duty consists of four elements:
- a consumer principle,
- cross-cutting rules,
- outcome rules and
- non-handbook guidance.
The consumer principle states that firms must act to deliver good outcomes for retail customers. The cross-cutting rules clarify what the FCA expects from firms under the consumer principle and how they should interpret the four outcomes. The outcome rules specify the key aspects of the firm-customer relationship that are essential for achieving good outcomes. These outcomes are:
- products and services that meet customers’ needs and expectations;
- fair and transparent prices and value;
- clear and comprehensible information that enables customers to make informed decisions; and
- appropriate support for customers throughout their relationship with the firm.
The non-handbook guidance provides examples and case studies to help firms understand and comply with their obligations under the consumer duty.
The consumer duty will come into force on a phased basis, starting from 31 July 2023 for open products and services, and from 31 July 2024 for closed products and services.
The Duty extends to the likes of CMA and we are progressing with our considerations and implementation to ensure the methodology is applied for the benefit of our clients and their customers well in advance of the above dates.