What is the Consumer Duty?
The Consumer Duty (‘the Duty’) sets the standard of care that firms should give to customers in retail financial markets. The Duty takes the form of a new principle, principle 12, which is added to the Principles for Businesses (PRIN):
“A firm must act to deliver good outcomes for retail customers”.
Complementing the new principle, there are ‘cross-cutting rules’ and ‘four outcomes’ rules and guidance. The cross-cutting rules are grouped around three expectations:
The remaining rules and guidance aim to achieve good outcomes for customers in four areas that represent key elements of the firm-consumer relationship:
To whom does the Consumer Duty apply?
The Duty applies to the regulated activities and ancillary activities of all firms authorised under the Financial Services and Markets Act 2000 (FSMA), the Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs), in respect of products and services for prospective and actual retail customers.
Each firm is responsible for its own compliance, but the FCA has accounted for the impact that manufacturers of products and services may have on retail end-users, even where there is no direct contractual relationship, and so there are obligations on manufacturers to the extent of their influence.
How far has the payments sector come in implementing Consumer Duty? Read more here.
What are firms expected to do?
Firms must consider how customers and prospective customers are impacted by their business, and review the culture, strategy, processes and controls of governance, price and value, consumer understanding and consumer support.
Implementation plans should have been approved by the end of October 2022. At this stage, consumer duty working groups will be working on implementing the identified actions. There is a significant amount of work to do before July 2023 and we are supporting clients by offering a range of services and programme accelerators to help financial services firms meet their obligations on time and help them protect their customers.
How can we help?
fscom can help your firm be ready by providing our expertise in a number of ways.
Our services include:
Our programme accelerators include:
On demand insights and resources
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If you are looking for highly qualified compliance experts to help prepare your firm for the impending 31 July 2023 deadline, contact us today for a free confidential consultation.