PIMFA
CONSUMER DUTY
The Consumer Duty is intended to ensure a higher standard of care across financial services for retail customers and to deliver good consumer outcomes throughout the life cycle of products and services.
The Consumer Duty is a significant regulatory change with a need for a shift in culture and mindset to focus on delivering good outcomes for retail customers. The Consumer Duty is subjective and requires a holistic approach: firms need to consider the application of the duty in line with their size, type and role within the distribution chain.
- Background and aim
The Consumer Duty aligns with the Financial Conduct Authority’s (FCA) business priorities focused on consumer outcomes and reducing and preventing serious harm. The FCA is increasingly focused on addressing consumer harms, particularly given the rise in customer vulnerability (as shown by responses to the FCA’s Financial Lives Surveys). The Consumer Duty intends to create a higher level of consumer protection in retail financial services, with the FCA highlighting their data-led and outcomes-based approach to supervision.
- ELEMENTS OF THE CONSUMER DUTY
- Consumer Principle 12 states that a firm must act to deliver good outcomes for retail customers.
- Cross-cutting rules state that firms must:
- Act in good faith toward retail customers
- Avoid causing foreseeable harm to retail customers
- Enable and support retail customers to pursue their financial objectives
- Products and services
- Price and value
- Consumer understanding
- Consumer support
This report is free for our members and is available to purchase for non members.
latest news
Square 4 Consumer Duty Research
Square 4 Partners is undertaking a major, industry-wide research and insights programme focused on Consumer Duty, examining how effectively it has been embedded across UK financial services and whether it is delivering improved outcomes for consumers in practice.
Partnering with YouGov, the research will be grounded in Firm and Consumer insights – ultimately aiming to answer the following questions:
- How well embedded is Consumer Duty across the UK Financial Services industry and what impact has it had on Firms
- Are consumers getting better outcomes in a post-Consumer Duty world
Benefits for Participating firms:
- Insight into how your firm compares against peers in relation to Consumer Duty implementation, delivery and compliance
- Insight into good practice, poor practice, gaps and improvement areas across financial services and your firm’s sector
- Insight into whether consumers are feeling the benefits of the Consumer Duty in different sectors
- Obtain a report grounded in detailed research across peer firms to help you understand where you need to focus or what initiatives need to be undertaken
If this is something you would like to be included in, please complete this Participation Form, and a member of the Square 4 team will be in touch with further details and to share a unique survey link.
If you would like to discuss the research further, please contact Advisory Director, Simon Goryl with any questions.
The deadline for completed surveys is 31 March.
Financial Conduct Authority – Consumer Duty: Board Report, Small Firms Support and Updated Webpages
The Financial Conduct Authority (FCA) has advised of work undertaken to aid firms apply the Consumer Duty.
This encompasses:
- A continued focus on support for smaller firms to help them apply the Consumer Duty in a proportionate and practical way
- Publication of good practice and areas for improvement to aid firms with board reports – this includes extra insight on how smaller firms can meet the requirements
- Making improvements for firms using the FCA website: key guidance, including good and poor practice examples are set out in a clearer, more structured layout to aid firms
Smaller firms are advised of further support going forward, such as
- Extra insight for smaller firms in any new good and poor practice materials, as well as expanding existing Consumer Duty best practice resources
- Issuing sector-specific guides to help small firms apply outcomes-based regulation (this will start with a pilot for credit broking firms this year)
Read the board report good practice and areas for improvement here
Access the refreshed webpage here
FCA Complex ETPs and the Consumer Duty
The FCA has published findings from its review of complex exchange-traded products (ETPs), including leveraged and inverse ETPs that reset daily.
Access the findings here.
