The Consumer Duty is:
- An outcomes-based regulation, and therefore,
- A step up on Treating Customers Fairly (TCF)
The Consumer Duty came into force on 31 July 2023 for new and existing products or services that are open to sale or renewal. For closed products or services, the Duty will apply from 31 July 2024. Source: Countdown to the Consumer Duty | FCA
The FCA’s own estimate is that one-off implementation costs for the sector could be as high as 2.4bn. (Source: How the consumer duty will affect advisers' day-to-day operations - FTAdviser.com published 04/08/2022)
It includes 3 cross-cutting rules, requiring firms to:
- act in good faith;
- avoid causing foreseeable harm; and
- enable and support retail customers to pursue their financial objectives
The outcomes relate to:
- products and services;
- price and value;
- consumer understanding; and
- consumer support.
Source: Using tech for consumer duty compliance no longer luxury - FTAdviser.com published 30/08/2022
Compliance will require much more detailed reporting, which will require much more detailed data, beyond what can be manually captured in simple spreadsheets. (Source: Using tech for consumer duty compliance no longer luxury - FTAdviser.com published 30/08/2022)
Initial impacts include:
- 40% of advisers say their firm has seen an increase in protection conversations with clients as a result of consumer duty. Source: Advisers have more protection conversations following consumer duty - FTAdviser
- Firms will become more reliant on data to mitigate risks of non-compliance.