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11 July 2023

The Duty imposes a pro-active requirement, and firms will need to be 'ahead of the curve' if they are to avoid supervisory, or even enforcement action from the FCA. We are uniquely well placed with our combination of lawyers and regulatory consultants to help with any or all of your Consumer Duty needs. 

The FCA's Consumer Duty – overview

Rightly or wrongly, the FCA believes there to be a general failure by authorised firms to provide retail consumers with products and services that meet their expectations. The Consumer Duty is the FCA's answer to the problem, with its stated aims of setting a higher expectation for the standard of care that firms give consumers. 

SM&CR/Consumer Duty enforcement – a straw in the wind

The FCA have made it very clear that they intend to actively enforce the requirements of the Consumer Duty post July 2023. This will inevitably lead to enforcement activity against the Senior Managers of any authorised firm found to be in breach of the new requirements.

Complaints Handling under the Consumer Duty

The most common complaint we hear about complaints is the unpredictability of the Financial Ombudsman Service ("FOS") – and the difficulties that creates for firms handling complaints under DISP.

FCA issues 'Dear CEO letter' to CFD Firms on Consumer Duty

The FCA recently published a 'Dear CEO letter', addressed to firms offering contracts for difference (CFD) as part of its series of letters sent to different sectors on the Consumer Duty, and following on from its December 2022 letter covering its CFD Strategy.

Consumer Duty Temperature Check & Assurance
Part of our Consumer Duty offering is a one-day ‘temperature check’ service, which is intended to provide you with a rapid and insightful review of your Consumer Duty compliance and alignment. We can also provide an independent assessment of firms’ culture and behaviours, to understand how it is supporting good customer outcomes.
The FCA is coming.. look busy 

Individuals responsible for the management of retail financial services firms are understandably concerned to know what the introduction of the Consumer Duty from 1 August 2023 will mean for them personally. As the FCA has categorically stated (in the very last para of CP21/36), ''All senior managers are responsible for ensuring that the business of the Firm complies with the requirements of the Consumer Duty on an ongoing basis." 

Will the duty to notify become a game of hide and seek?

We discuss the newly announced duty to notify the FCA of breaches, or suspected breaches, of the Consumer Duty within its distribution chain. We explore their reminder of a firm's own PRIN 11 requirements as part of this Policy Statement and the likely practical effects.

The FOS and Consumer Duty

The consumer financial services industry's current concerns about the decision making process at the FOS in its current guise are well-known. The introduction of the Duty is likely to heighten those concerns, particularly if it leads to more apparently arbitrary interpretation of vague principles and the retrospective imposition of higher standards. 

FCA speech on cultural evolution: How culture must change to meet expectations
Emily Shepperd, Chief Operating Officer and Executive Director of Authorisations at the FCA delivered a speech to the Westminster Business Forum highlighting the importance of culture for confidence and how it can dictate bottom lines.  
The effect of the Consumer Duty and the next steps
The Consumer Duty has created more trust in markets and is steadily supporting economic growth. However, firms must remain proactive and regularly review and monitor outcomes.

Further Reading