In July 2022 the Financial Conduct Authority (FCA) published its Consumer Duty Implementation plans by way of a Policy Statement (PS22/9) and Finalised Guidance (FG22/5). These documents can be read in full at https://www.fca.org.uk/publications/policy-statements/ps22-9-new-consumer-duty and https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf, respectively.
From the FCA “We set out the final rules and guidance for a new Consumer Duty that will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first”.
Going into 2023, the new Consumer Duty remains at the top of the FCA’s policy priority list, with an implementation date of 31 July 2023. Since the final rules and non-handbook guidance were published in July 2022, the FCA has issued a series of further communications providing additional clarity in its expectations. In March 2023 the FCA launched a Consumer Duty firm survey, which is being sent to a sample of small and medium sized firms to understand the progress they are making in implementing the Consumer Duty.
TCF re-branded or a shift in paradigm?
At first glance, compliance officers may have the impression that Consumer Duty is merely a re-branding of Treating Customers Fairly (TCF) whilst the reality is possibly a significant shift in paradigm; So what is new?
- New Consumer Principle that requires firms to act to deliver good outcomes for retail customers.
- Rules relating to the four outcomes (Products and services, Price and value, Consumer understanding and Consumer support)
- Three cross-cutting rules (Act in good faith towards retail customers, Avoid foreseeable harm to retail customers and Enable and support retail customers to pursue their financial objectives providing greater clarity on the FCA’s expectations under the new Principle and helping firms interpret the four outcomes. A very useful analysis is provided at https://ruthfinch.com/website/the-consumer-duty-the-cross-cutting-rules/
Auditing Consumer Duty compliance
To guide discussions, the FCA have provided 39 questions, some on each outcome and also on culture, governance and accountability. This checklist may be of use to an auditor when assessing compliance with good customer outcomes: