Consumer Duty

Consumer Duty is a standard introduced by the Financial Conduct Authority, in the UK, intended to improve Consumer protection for financial-services firms in the UK[1]

Requirements

The new rule establishes a "Consumer Principle"; firms must "act to deliver good outcomes for retail customers".[2] Affected firms should review their products and their customer journeys. This also requires effective anti-fraud controls.[3]

There have been concerns that these requirements place an undue burden on smaller firms.[4]

Components of Customer Duty
  • The "Consumer Principle", which becomes the 12th Principle of the FCA's "Principles for Businesses"[5]
  • The cross-cutting rules
  • The four outcomes:
    • the governance of products and services
    • price and value
    • consumer understanding, and
    • consumer support

Timeline
  • The Consumer Duty standard evolved from Following FCA consultations in 2021;
  • The final version of the guidance was published in July 2022;[6]
  • Implementation plans should have been agreed by the firms' leadership on 31 October 2022;
  • Firms must implement the rule for their current business by July 2023;
  • Consumer Duty is applied to "closed books" by July 2024;
  • First annual board attestation by 31 July 2024.

See also

References
  1. https://www.moneymarketing.co.uk/opinion/ian-mckenna-no-one-will-escape-consumer-duty-scrutiny/
  2. https://www.pwc.co.uk/industries/financial-services/understanding-regulatory-developments/fca-proposes-new-consumer-duty-in-paradigm-shift-for-firms.html
  3. https://inews.co.uk/news/business/fraud-fears-fca-warning-finance-firms-customers-new-rules-2164354
  4. https://www.professionaladviser.com/opinion/4076539/disproportionate-burden-consumer-duty-advice-firms
  5. https://www.mondaq.com/uk/consumer-law/1227476/new-fca-consumer-duty-rules
  6. https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf
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