01 August 2023
In a landmark development, financial services today embrace a new era of consumer protection as the Consumer Duty comes into effect, ushering in a comprehensive framework aimed at ensuring fair treatment and positive outcomes for retail consumers. This ground-breaking intervention represents the most significant advancement in consumer protection in decades and stands as a fundamental pillar of the FCAs three-year strategy.
The Consumer Duty, designed to cover all products and services available for sale or renewal, signals a pivotal shift towards putting the needs and rights of consumers front and centre. Its overarching goal is to ensure that consumers receive the necessary support when they require it, clear and understandable communication, as well as products and services tailored to their specific needs, offering fair value.
RSM has spent months with a number of financial firms employing great effort to comply with the new regulations. It is recognised that the Consumer Duty has and will continue to result in significant cultural changes, system enhancements and ongoing focus on the “how” firms measure, monitor and assess the outcomes achieved for their customers. The FCA has described the Consumer Duty as an opportunity to elevate industry standards and minimise consumer harm and instil trust and confidence among consumers whilst fostering healthy competition and innovation.
As the Consumer Duty takes effect, firms will be held accountable for delivering positive customer outcomes and safeguarding consumers from potential harm. Compliance will not only serve to protect consumer interests but also to bolster the reputation and reliability of financial service providers.
While the road to implementing the Consumer Duty has been challenging, it is essential to acknowledge that the journey is not over. The next 12-18 months will see the FCA put its Consumer Duty supervisory strategy into effect, testing how firms are complying. It should be expected that some firms will be called upon as part of Multi-Firm Work the Regulator will carry out, others will receive individual information requests and some may receive visits. Firms will want to ensure that over this next year that they have the correct systems, controls and necessary oversight in place to appropriately monitor, assess and challenge consumer outcomes, ensuring they can evidence at each stage.
For more information of how RSM can help, please contact Paul Jennings, Michael Mccormick and Catherine Brittain