We are now one month on from the Consumer Duty implementation date and we have already seen the Financial Conduct Authority (“FCA”) undertake supervision activities under the Consumer Duty principle.
The Consumer Duty went live on the 31st of July 2023. The Duty requires firms to put consumers’ needs at the centre of their business and produce communications that consumers can understand, provide fair-value products and services that meet consumer needs and provide consumer support when they need it.
The Consumer Duty introduced;
- A new Consumer Principle which will become Principle 12 of the Principle’s for Businesses.
- Cross-cutting rules which will require firms to act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives, and;
- Four Outcomes which firms must ensure that each of their customers receive.
Preparations for the introduction of the Consumer Duty have been ongoing for directly regulated firms for over 18 months. With the long-awaited change to the regulatory landscape now implemented, we are beginning to see how the FCA will use the Duty to regulate the financial services industry. Most recently, the FCA began analysis of lenders’ fair value assessments. The Regulator requested key information from 9 firms about their assessments of what value their savings products offer. The FCA have stated that they will publish an update later this autumn, including any steps they might take where any areas of concern are identified.
We will likely continue to see the FCA request information across the plethora of financial services and products to ascertain how effectively firms have implemented the Consumer Duty into their businesses.
The Consumer Duty is an effective supervision tool for the Regulator and firms must be confident in their implementation of the Duty and their ability to meet the four consumer outcomes.
