In July the FCA published a final rules and guidance Consumer Duty Policy Statement that would set clearer and higher expectations for firms’ standards of care towards consumers.
On the 16th of November Nikhil Rathi, Chief Executive of the FCA discussed the new Consumer Duty Policy in more detail in a speech at the UK Finance annual dinner. He entitled his speech: "Rolling regulation forwards".
The key points to note from his speech:
- Parliament mandated the Consumer Duty due to falling public confidence in retail financial services
- The Consumer Duty puts the onus on firms to act to deliver good outcomes for consumers:
- To act in good faith
- Avoid causing foreseeable harm
- Support customers to pursue their financial objectives
- After extensive feedback, the FCA introduced a phased deadline to help firms embed what is undoubtedly a major cultural and operational shift
- Firms seem to be on track therefore the FCA does not see the need to move the deadlines
- Firms must:
- Give customers information that they can understand
- Point customers to products, services and post-sales support that meet their needs
- Promote products and services that offer fair value
- The FCA will remain pragmatic in their implementation oversight and ask for continued openness from firms on their implementation path
- The FCA will be monitoring closely to make sure the Consumer Duty does not prompt risk aversion in firms and the withdrawal of products for difficult-to-reach groups
- After some heavy lifting upfront, the Duty should mean fewer reactive rules created by the FCA in the coming years
-
Regulation of the future. The FCA want to work closely with industry so that the consumer duty can help shape a framework for use of Artificial Intelligence (AI) and other new technologies
-
The Consumer Duty alongside the Senior Managers and Certification Regime (SMCR) will give the FCA a framework to respond quickly to new innovations so that new products can be trialled, with informed consent and consumer interests front and centre
Here's the FCA's full timeline toward full Consumer Duty Compliance:
The policy is comprised of a Consumer Principle defining overall standards, three Cross-Cutting Rules defining an expected structure of behaviours, and Four Outcomes that all consumers should expect:
How FourthLine can help
The path to Consumer Duty compliance requires all regulated firms to undertake detailed documentation of all decisions made together with recommended actions. FourthLine can help by being your trusted support partner.
Enquire here to find out more about our support partnership programme
