FCA’s ten expectations of firms under the Consumer Duty

As part of it’s incoming Consumer Duty the Financial Conduct Authority (FCA) has set out ten expectations of how firms should act to ensure they are complying with the new rules.

These expectations prioritise firms putting consumers at the heart of their business and include not seeking to exploit customers’ lack of knowledge and conducting regular monitoring.

The Consumer Duty, published today, sets higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first.

It includes a suite of rules and guidance setting more detailed expectations for firm conduct in four areas that represent key elements of the relationship with consumers:

The duty is underpinned by the concept of reasonableness, which the FCA said is an objective test and “means that the rules and guidance must be interpreted in line with the standard that could reasonably be expected of a prudent firm:

 

As part of this, in its FG22/5 Final non-Handbook Guidance for firms on the Consumer Duty the regulator set out its expectations for how firms should act under the duty.

The ten elements firms should enact are:

 

 

The FCA confirmed to Health & Protection that despite calls from the industry to do so, it will not be banning loaded premiums as part of the Consumer Duty.

However, it may look at the issue over the next year as it begins to review implementation of the duty.

The regulator also extended the time firms will have to enact the rules within their organisations with a full year given for active products and services and two years for it to apply to closed book customers.

 

 

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