Consumer Duty Flyer - Flipbook - Page 3
The Consumer
Duty impact
‘We want…firms to get it right in the first
place and continually self-assess so that they
can justify the appropriateness of their
business models and their treatment of their
customers’
CP21/13 2.25
The Regulator is looking for firms to address some of the persistent issues they see in the marketplace:
•
Firms providing information that is misleadingly presented or difficult for consumers to understand, hindering their
ability to properly assess products/services
•
Products and services that are not fit for purpose in delivering the benefits that consumers reasonably expect,
or are not appropriate for the consumers they are being targeted at and sold to
•
Products and services that do not represent fair value, where the benefits consumers receive are not reasonable
relative to the price they pay
•
Poor customer service that hinders consumers from taking timely action to manage their financial affairs and making
use of products and services, or increases their costs in doing so
•
Other practices which hinder consumers’ ability to act, or which exploit information asymmetries, consumer inertia,
behavioural biases, or vulnerabilities
Firms should recognise that such a wide-ranging initiative has the potential to impact:
The business model
It will affect how products are made, marketed, administered and priced – and those changes
will inevitably feed through into conversion rates, sales volumes, operating costs and profits.
Governance and oversight
The FCA have explicitly linked the new Consumer Duty principle to the existing SMCR
framework, and also added new requirements for conduct rules staff. There is therefore a clear
risk to individuals if they cannot demonstrate they have taken ‘reasonable steps’.
Ongoing management
Consumer Duty is not a one off exercise, firms will need to build adherence to the new principle
into their overall control framework, and ensure ongoing monitoring takes place. Which will
present challenges across the 3 Lines of Defence to build these new requirements into the
oversight frameworks.
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