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
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our latest news
FCA Consumer Duty: international payment pricing transparency
The FCA has published a paper setting out examples of good and poor practice in how firms communicate the cost of international payments.
The examples provided focus on communications to customers prior to them making international money remittance and cross-border payments as well as fixed, variable, and third-party fees.
Next steps:
- Firms are remined they must regularly monitor the effectiveness of their communications in driving good outcomes for retail consumers under Consumer Duty
- The FCA expect firms to review the information they provide to ensure consumers can understand the costs they will incur, compare choices, and make informed decisions and use the examples to consider improvements and deliver better outcomes for retail customers.
Read the publication here
Financial Conduct Authority - Consumer Support Outcome: good practices and areas for improvement
Following a review of firms’ approaches to consumer support, the Financial Conduct Authority (FCA) has published good and poor practice on how firms are approaching the consumer support outcome of Consumer Duty.
Noting that firms must find their own approaches to embedding the Duty, based on their size, activities, and resources, the findings set out areas for improvement, such as aligning support processes to the target market and embedding a culture aligned to Consumer Duty.
The FCA also highlight good practice, for example, building a culture that delivers good customer support outcomes, and monitoring whether customers are receiving the support they need.
- Read our summary
- Access the full publication here.
