As mentioned in previous updates, the Financial Conduct Authority (FCA) is introducing its Consumer Duty. On 31 July 2023, there will be a new FCA Principle of Business. Principle 12 sets out that: “A firm must act to deliver good outcomes for retail customers.” Principle 12 is considered to impose a higher and more exacting standard of conduct than current FCA principles. Failure to comply with Principle 12 may lead to FCA enforcement action resulting in fines and associated damage to reputation.
Principle 12 is supported by four outcomes that consist of rules and guidance setting out more detailed expectations for all firms’ conduct in four particular areas:
- The products and services outcome
- The price and value outcome
- The consumer understanding outcome
- The consumer support outcome
The FCA’s website has plenty of information to help firms and they have been discussing the Consumer Duty on their Inside FCA podcasts.
Of the four outcomes, consumer understanding and consumer support are arguably the most relevant to our members and they have a direct impact as you are customer-facing. The FCA’s rules and guidance are always very subjective and are not prescriptive.
Consumer Understanding
The FCA has stated they: “want consumers to be given the information they need at the right time and presented in a way they can understand. The consumer can understand enough about the product, say how it works, its benefits, risks and costs to be able to make good decisions. We want consumers to be in a position to make informed decisions. And it should be good for firms too, as it will reduce complaints.”
Consumer Support
This outcome is all about ensuring the consumer gets the support they need when they need it. For example, after-sales support should be as good as pre-sales support. Also, dealing with complaints should be done promptly and firms should be reviewing the complaint data to make certain they are monitoring and ensuring good consumer outcomes.
The FCA website, https://www.fca.org.uk/ is the place to visit for specific information on Consumer Duty and we recommend you contact your product/service manufacturer. If you are unsure of your responsibilities, we suggest you contact your financial product/service manufacturer to understand how you can meet your obligations under the Consumer Duty.
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