What does Consumer Duty mean for you?
Consumer Duty sets higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first.
The FCA has set out final rules and guidance for Consumer Duty which is made up of 3 different elements:
A firm must act to deliver good customer outcomes for retail clients.
This means customers get products that are designed to meet their needs and represent value for money. Plus, they should have the information and support they need to make informed decisions that are in their financial interests.
A customer should have enough information and support to decide if, for example, they want a mortgage, and if so, which one is right for them. Good outcomes will be different depending on the customer's needs and objectives. A good outcome for someone saving up for a first home will be different to someone planning for retirement.
Overarching cross-cutting rules that require 3 key behaviours from firms:
1. Act in good faith
- Has the customer been given the information they need in a way that is understandable to make their financial decision?
2. Avoid foreseeable harm to retail customers.
- Understand what customers want from products and services and support them to achieve this.
3. Enable and support retail customers to pursue their financial objectives
- Make sure customers aren't disadvantaged by using products and services.
- Think about individual customer needs and any difficulties or vulnerabilities they might have that may put them at greater risk.
A suite of underpinning rules and guidance that set more detailed expectations for a firm's conduct.
1. Products and services
- Do the customer benefits justify the price paid for a product or service?
Are you acting in good faith?
2. Price and value
- Do the products and services meet the customer’s needs?
- Will it help them achieve their financial objectives?
3. Consumer understanding
- Do customers fully understand the product or service and what they are signing up for?
- Has the complexity in communications been reduced making sure product information is easy to read and understand?
4. Consumer support
- Are customers receiving the support they need when they need it?
- Is the support being offered the right support for their circumstances?