The Consumer Duty is a collective term for a new FCA Principle and set of rules and guidance, which FCA have designed to improve the focus of firms on customer outcomes and to reduce instance of customer harm.
The Consumer Duty will take effect in respect of open products and services from July 2023. The Consumer Duty represents one of the biggest regulatory rule implementations of recent times and will likely have a significant effect on the way the market works and on how the FCA approach regulation over the coming years.
The FCA felt that there were practises in various parts of the financial services industry which were acting counter to customer interests, but which weren’t definitely outside of the letter of the pre-existing rules and covers retail activities for all regulated firms. It doesn’t cover unregulated business or activities not involving retail customers.
The Duty applies across the distribution chain from product manufacturers right the way down to product distribution and firms undertaking post-sale activities. This will include firms who do not have a direct relationship with the end customer but can have an impact on the outcomes that these customers get.