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FCA Consumer Duty

Updated: May 18, 2022

The FCA has outlined a new Consumer Duty. This will most likely be set out as rules and guidance in the FCA handbook.

Ultimately, there will be a higher level of protection for consumers and a higher level of expectation of care from firms providing services.

The Consumer Duty will require your firm to:

  • ask what outcomes consumers should be able to expect from their products and services

  • act to enable rather than hinder these outcomes

  • assess the effectiveness of their actions

What are the key three elements?

  1. A Consumer Principle Strengthens the existing principle 6, that a firm must have due regard to the interests of its customers and treat them fairly. Firms must now take an objective standard as a whole and consider the reasonable expectations of consumers when buying/using their product or service.

  2. Cross-cutting rules These rules will set out the key behaviours required by the Consumer Duty and make clear what the Consumer Principle requires from firms To act in good faith To take all reasonable steps to avoid foreseeable harm to consumers Take all reasonable steps to enable consumers to pursue their financial objectives

  3. Four outcomes The Four Outcomes represent the key elements of the firm-customer relationship: How firms design, sell and service products and services, and the key contact points along the customer journey.

The behaviour and actions of firms in relation to the four outcomes play an important part in enabling consumers to meet their financial needs and improve their financial wellbeing.