The Consumer Duty

The Financial Conduct Authority’s new Consumer Duty legislation sets higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first.

Published in July 2022, the Consumer Duty goes beyond the existing Treating Customers Fairly (TCF) framework and requires FCA regulated firms to ‘act to deliver good customer outcomes’.

• A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers.
• Cross-cutting rules providing greater clarity on the FCA’s expectations under the new Principle and helping firms interpret the four outcomes (see below).
• Rules relating to the four outcomes the FCA wants to see under the Consumer Duty. These represent key elements of the firm-consumer relationship which are instrumental in helping to drive good outcomes for customers.

• Products and services.
• Price and value.
• Consumer understanding.
• Consumer support.

These rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.

We put the customer at the heart of everything we do. We already have well-established frameworks embedded into our business to ensure we adhere to existing regulatory requirements. Our Customer Promise ensures we remain focused on delivering the highest standards of sales and service across the entire lifecycle of our products and services.

Nevertheless, the new Consumer Duty has provided us with the opportunity to further review our approach and the product(s) and services you provide on our behalf. We are focusing on a number of key areas. These include:

• A definition of what we mean by “good outcomes” and enhancing our measurement of our adherence to our Customer Promise to take any new obligations under the Consumer Duty into account.
• Engagement with our Board and Board Champion to shape our Consumer Duty programme.
• A review of all customer touchpoints including third party support and distribution to ensure customers receive the necessary support at the right time and products and services that meet their needs.
• Enhancements to our Fair Value Assessments to ensure our products and services offer fair value.
• Undertaking a review of our key customer communications to ensure we use simple, easily understood language that is appropriate to our target audience and accessible to customers who may have specific needs.
• Putting processes in place to allow us to engage with our target customers and measure their responses to ensure our products, services and communications meet their needs and expectations.
• Enhanced performance monitoring, against the Duty’s key outcomes, to ensure we maintain the highest levels of service and support (including service and support for vulnerable customers) and processes in place to respond where further improvement opportunities present themselves.

While our review will consider the parts of your customers’ journey that we’re responsible for, you should review the parts you undertake in accordance with the FCA’s requirements.

You’ll need to ensure your arrangements enable customers to make informed decisions by giving them appropriate information, at the right time, in a way they understand. 

You may want to consider, for example, your customer contact strategy, sales processes, customer communications across all media types, premium finance, complaint handling process, and terms and conditions.

You should also ensure that customers receive an appropriate standard of support, including those with characteristics of vulnerability.

Please note that this Consumer Duty guidance is not exhaustive. We encourage you to refer to the FCA’s dedicated Consumer Duty pages on their website for more information. The FCA’s published policy statement can also be found here.

We will be writing to all our brokers asking them to complete a short questionnaire on the processes they undertake. We will review these responses to check that we’re doing all we can to avoid harm, allow customers to pursue their financial objectives and create good outcomes.

We will continue to regularly engage with you, and this will include re*/viewing how you are ensuring good customer outcomes and working with you to make any enhancements required.

If you hold a bespoke arrangement or scheme with Ecclesiastical, there’s more you’ll need to consider. Your Ecclesiastical account manager will be in touch soon to discuss further.

We’ll start reporting against the new Consumer Duty outcomes from August onwards. The FCA has stated a deadline of 31 July 2023 for firms to adhere to the new Consumer Duty rules and we’re well on track to achieve this.

We will continue to update you all on our preparations as we approach the deadline.