Consumer Duty : Understanding and navigating the FCA’s Consumer Duty

Jan 19th '24

As we step into the New Year, The Financial Conduct Authority (FCA) has made it abundantly clear that its focus remains firmly fixed on the consumer duty.


The FCA’s recent consumer duty webinar shed light on the regulatory expectations for firms, governing bodies, and the steps needed to ensure compliance. In this article, we delve deep into the key takeaways from the FCA’s webinar, providing valuable insights and guidance for firms operating within various sectors, including insurance, banking, consumer investments, and consumer credit.


Consumer Duty: The Continuous Journey of Compliance

The FCA’s message is crystal clear: Consumer Duty is not a one-and-done exercise. Firms are urged to continuously challenge themselves in meeting the Duty’s requirements, emphasizing ongoing monitoring and measurement. Using data to assure that outcomes align with customers’ interests is paramount.


Consumer Duty:  Closed Products and Services

For firms dealing with closed products, the next deadline looms on July 31, 2024. These firms must review their closed products’ designs to identify potential harm or hindrance to customers’ financial objectives. While the Duty doesn’t necessitate identifying a target market and distribution strategy for closed products, it does require compliance with cross-cutting rules. Ensuring that closed product customers receive necessary support, comprehensible communications, and fair value is essential. Firms must also analyse why products were closed and take steps to prevent similar occurrences.


Consumer Duty:  The Role of the Board/Governing Body

The FCA emphasizes the role of boards and governing bodies in reviewing and approving annual assessments. These assessments should gauge whether firms are delivering favorable outcomes consistent with the Consumer Duty. Boards must consider monitoring results, identify poor outcomes, and evaluate their root causes and impacts. The FCA will scrutinize board reports, ensuring that firms take them seriously and act decisively.


Consumer Duty:  Fair Value Assessments

Fair value assessments go beyond just pricing. Firms must consider the overall value of their products or services, including support quality, product features, and distribution channel flexibility. Advisory services may justify higher costs, while some products may require scrutiny for fairness in commission payments. Fair value assessments should be ongoing, adapting to changing market conditions.


Consumer Duty:  Supporting Vulnerable Customers

Consumer Duty places a spotlight on supporting vulnerable customers. Some firms excel in centralising processes and deploying experienced staff, resulting in improved handling and data quality. However, a one-size-fits-all approach is discouraged. Firms must adopt a nuanced strategy for dealing with vulnerable customers, ensuring that staff are confident in their interactions. Testing customer understanding and actively seeking feedback are vital components of this strategy.


Consumer Duty:  Information Sharing

Manufacturers and distributors must share information that aids in product development, target market identification, and issue resolution. Collaboration is key, but information sharing should be proportionate and efficient. Firms need to agree on the data necessary to enhance customer outcomes while avoiding unnecessary burdens.


Consumer Duty:  FCA Supervision and Enforcement

The FCA sees Consumer Duty as integral to its work, employing supervisory and enforcement tools when necessary. They prioritize working with firms through supervisory conversations to drive voluntary changes. However, formal powers may be invoked if firms are slow or unresponsive. Multi-firm, thematic, and cross-sector reviews are part of the FCA’s arsenal to ensure compliance.



Consumer Duty is no longer on the horizon; it’s here, and it’s here to stay. The FCA is resolute in its commitment to ensuring good customer outcomes, and firms are expected to proactively monitor and act in alignment with these objectives. Compliance is not just a regulatory requirement; it’s a continuous journey towards better customer outcomes.


In conclusion, staying informed, proactive, and adaptable is the key to navigating the consumer duty landscape successfully. As we embark on this regulatory journey in 2024, let us remember that compliance isn’t just about ticking boxes—it’s about delivering value to customers and safeguarding their interests.


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