The Consumer Duty is one of the most significant regulatory reforms to affect the financial services sector for many years.
- The Consumer Duty will increase protection for consumers
- It will affect the entire financial services sector
- It comes into effect on 31 July 2023
The Consumer Duty is one of the most significant regulatory reforms to affect the financial services sector for many years. The Financial Conduct Authority (FCA) is seeking to ensure that its regulated firms consistently deliver good outcomes for retail customers, and the Consumer Duty will apply to every firm that is authorised and regulated by the FCA. It will encompass the entire financial services sector, from fund providers and insurance companies to funeral plan providers.
“The Consumer Duty is an outcomes-based approach … a customer-centric regulation” (Sheldon Mills, FCA)
The Consumer Duty is being put in place to improve consumer protection across the financial services sector. In February 2023, the FCA’s Sheldon Mills, Executive Director, Consumers and Competition, commented: “The Consumer Duty is an outcomes-based approach … a customer-centric regulation”.
The Consumer Duty comprises three key elements:
- A Consumer Principle requiring firms to act to deliver good outcomes for retail customers
- Cross-cutting rules providing greater clarity on the Consumer Principle’s expectations
- “Four outcomes” that represent key elements of the relationship between the firm and the customer:
1.Communications and consumer understanding
2. Products and services
3. Customer service and support
4. Price and value
Above all, the Consumer Duty focuses on the best interests of the customers. It is designed to ensure that consumers feel confident that their financial services providers will always act in their best interest to deliver good outcomes for them so that they can achieve their financial goals. It comes into effect on 31 July 2023.
For more information, visit www.fca.org.uk/firms/consumer-duty.
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