The Consumer Duty

The FCA wants to see firms doing more to protect customers from harm in retail financial markets. To address this, it is introducing a new consumer duty that will set higher expectations for the standard of care that firms provide to customers and goes beyond the FCA’s current set of Principles and rules.

The consumer duty will consist of a new consumer principle that will be supported by cross-cutting rules and guidance. Both of these will be underpinned by further rules and guidance relating to four outcomes that represent key elements across the whole firm-consumer relationship.

What is the Consumer Duty?

There will be three elements to the consumer duty:

New consumer principle. The new Principle 12 will state “A firm must act to deliver good outcomes for retail clients”.

Cross-cutting rules. These will support the consumer principle by setting clear expectations for firms’ cultures and behaviours.

The four outcomes. This is a suite of other rules and guidance linked to four particular outcomes that represent the key elements across the whole firm-consumer relationship. The outcomes relate to the quality of firms’ products and services, the price and value of products and services, consumer understanding and support for consumers.

FCA’s expectations of firms

The FCA expects firms to:

• Ensure that their board or equivalent governing body takes full responsibility for ensuring that the consumer duty is properly embedded within the firm, and senior managers are accountable for the outcomes their customers are experiencing.

• Monitor and regularly review the outcomes that their customers are experiencing in practice and take action to address any risks to good customer outcomes.

• Ensure that the interests of their customers are central to their culture and purpose and embedded throughout the organisation.

• Continuously learn from their growing focus and awareness of real customer outcomes.

• Consistently consider the needs of their customers, and how they behave, at every stage of the product/service lifecycle.

• Support their customers in realising the benefits of the products and services they buy and acting in their interests without unreasonable barriers.

• Not seek to exploit customers’ behavioural biases, lack of knowledge or characteristics of vulnerability.

• Communicate and engage with customers so that they can make effective, timely and properly informed decisions about financial products and services and can take responsibility for their actions and decisions.

• Provide products and services that are designed to meet customers’ needs, that they know provide fair value, that help customers achieve their financial objectives and which do not cause them harm.

• Put consumers at the heart of their business and focus on delivering good outcomes for customers.

How Flawless Money can help implement the Consumer Duty in your business

The new rules apply from 31 July 2023. Flawless can assist businesses with preparation ahead of the July deadline with the Flawless Money Consumer Duty Compliance Framework including:

• Drafting reports, policies and procedures to document the firm’s compliance with the Duty

• Advising on and providing a tailored monitoring programme to ensure ongoing compliance

• Review and amendment of customer-facing documentation to ensure compliance with the cross-cutting rules

• Advising on best practices in terms of e-money and payment product design

• Identify any gaps in the firm’s current practices and provide solutions for any existing gaps

• Carrying out e-money and payment product reviews to ensure compliance with the cross-cutting rules

For more details on how we can help, email :

FCA Resources

Consumer Duty Final Rules Here

FCA Information for firms Here

FCA Podcast: Price and Value Here

FCA Podcast: Products and Services Here

FCA Podcast: Consumer Understanding Here