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 vulnerable consumers (as shown by responses to the FCA’s Financial Lives Surveys 2020-2023). 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.
26 June 2024
Financial Conduct Authority Consumer Duty updates
Annual board reports
Read the PIMFA summary of the FCA update
Insurance multi-firm review of outcomes monitoring
The Financial Conduct Authority (FCA) have published key findings from their review of larger insurance firms’ approaches to outcomes monitoring under the Duty.
The FCA advise the review findings represent a new expectation of firms and as such the FCA have included examples of good and poor practice which may be useful for other sectors as firms finalise their first annual board report.
