What is the new FCA Consumer Duty?

What is the new FCA Consumer Duty?

What is the new FCA Consumer Duty?

The latest set of rules are based on a more scientific approach with higher expectations than before. Read our series of articles designed to help you prepare for the changes your firm will need to make.


Get a better understanding what the FCA Consumer Duty means for you and your business. Our Consumer Duty Series (#BDOconsumerdutyseries) is designed to do just that, a series of articles exploring the new regulation in detail, along with practical thoughts to help firms prepare for the changes they will need to make.

Our seventh article in the series explores the final rules, including some changes to key dates and clarity on closed book business. 

Click here to read our full article


Previous articles in The Consumer Duty Series

What is The Consumer Duty focused on?

In CP21/13 and CP21/36, The FCA explain why the Financial Sector needs to adopt a new mindset, to restore consumer trust and strengthen performance. “The FCA has seen practices … that cause harm. These include firms presenting information in a way that exploits consumers’ behavioural biases, selling products or services that are not fit for purpose, or providing poor customer support.”

The proposed regulation aims to change this dynamic for retail consumers. It has a wide scope, applying to all retail consumer products and services within the FCA’s remit and those ancillary to it. However, it is important to note that the new duty is to enable retail consumers to make good choices. “(The FCA) want to see a higher level of consumer protection in retail financial markets, where firms compete vigorously in the interests of consumers. We also want to drive a … system in which firms can thrive and consumers can make informed choices.”

What are the four consumer outcomes?

The Consumer Duty comprises three key elements: A new Consumer Principle; cross-cutting rules requiring firms to act in good faith, avoid foreseeable harm and help consumers achieve their financial objectives; and four consumer outcomes, those being:

  • Consumer understanding - Consumers are equipped to make good decisions. Information is made available at the right time and is understandable
  • Price and value – products and services should be sold at a price that reflects their value. There should be no excessively high fees
  • Product and services – the firm’s products and services should be fit for purpose. The terms match the target consumer needs and products and services work as expected.
  • Consumer support – customer service should be responsive and helpful. It should be as easy to complain about or switch and cancel products or services as it was to buy them.

What is The Consumer Duty timeline?

Whilst final rules could change when published at the end of July, The FCA consider there is sufficient information in CP 21/36 to enable firms to begin their planning. Currently, firms will then have until the end of April 2023 (now extended to July 2023) to complete implementation.

The most recently published FCA Board minutes note that there would be a phased implementation period for the new rules, and that consumers most affected by the cost-of-living crisis would benefit from the proposals under the Consumer Duty earlier rather than later.  The FCA is also signalling its expectations in authorisations correspondence, routine supervision, and communications to lenders.

How can BDO help?

We are currently supporting several clients on their Consumer Duty journey. To find out how you can start taking practical steps toward implementation, get in touch today with Richard Barnwell.