Despite the fast-approaching launch date of the new Consumer Duty at the end of July, it seems that some firms are feeling quite relaxed about its impending implementation, as new research from Aviva reveals.
When asked, over 8 in 10 (84%) agreed with the statement ‘Consumer Duty feels like a rebranded "Treating Customers Fairly" (TCF).
This perception is however very misguided. The Consumer Duty arguably represents the biggest shift in the regulation of financial services in more than a decade. It puts customers at the heart of all financial service businesses. It would be misguided to see it as only a rebranding of TCF.
The change is much more fundamental than that. In the words of the FCA, the Consumer Duty “raises the bar”.
Ten reasons why the Consumer Duty is not just a rebranded TCF
- From fair to good: The Consumer Duty expects that we strive for exceptional outcomes for our customers, not just satisfactory ones. The bar has been raised significantly.
- From actions to outcomes: The Consumer Duty shifts the focus from the actions we are taking to the outcomes we are delivering. We will be judged against these outcomes, not just against our ability to comply with a tick-box list of obligations.
- From words to evidence: Under the Consumer Duty, we are required to provide evidence of our support for good outcomes. Merely using reassuring language or the absence of complaints will not suffice. We must demonstrate our commitment to delivering exceptional results for our customers.
- From understandable to understood: It remains a requirement that our communications are “fair, clear and not misleading”. The Consumer Duty demands evidence that our communications are understandable and understood by those who receive them.
- For vulnerable customers: The Consumer Duty highlights the needs of vulnerable customers, whether it be related to health, life events, financial resilience, or personal capability. It is imperative that we renew our consideration of these needs to ensure exceptional outcomes for all.
- For fair value: The Consumer Duty requires us to provide a written explanation of why we believe our products and services offer value, both at present as well as in the future.
- Focus on inaction, as well as action: The Consumer Duty will judge us against actions we may not be taking, as well as those we are, in our responsibility to support good outcomes.
- From one end of the chain to the other: Many in the distribution chain are involved in the delivery of good customer outcomes. The Consumer Duty will not allow us to observe poor practice by shifting responsibility on third parties or other suppliers in the value chain.
- For the good of those we serve: The FCA is implementing the Consumer Duty to bring about necessary change, and it will be monitoring compliance from all businesses. It is important that we all play our part in ensuring exceptional outcomes for our customers.
- Forever: It is important to note that the Consumer Duty is a continuous effort that requires annual reviews of compliance by each business. It is not something that can be done once and forgotten about. This commitment to exceptional outcomes for customers is here to stay.
