The Financial Conduct Authority has implemented a new standard known as Consumer Duty. It took effect on the 31st of July 2023 and is often called the “biggest overhaul for the UK’s financial services industry in 20 years”.

In essence, the standard demands that all businesses operating within the financial services industry must “act to deliver good outcomes for retail customers”. In other words, institutions can’t knowingly offer services which risk harming the consumer.

What Consumer Duty covers

The Consumer Duty standard applies to all firms providing financial products and services to retail customers. There are some exceptions, but these only apply where an exclusion already exists, such as unregulated buy-to-let contracts. Products that are sold to retail and non-retail customers are covered by the standard.

This new standard requires firms to do the right thing, otherwise a consumer can complain. The financial watchdog will take any deviation from the new rules seriously and can apply harsh punishments against non-complying financial firms. To ensure you are compliant with the new consumer duty regulations, you should take note of the following:

• Ensure all products and services offer value
• Products and services must be easy to cancel
• The most important information about any product or service must be clearly displayed, nothing should be hidden in the small print
• Your firm has a requirement to help if a consumer is struggling or has an issue
• Customer support must be easy to access and needs to offer helpful advice
• You should act to deliver a good outcome

The Financial Conduct Authority has warned all financial services businesses that evidence of risk of harm to the retail consumer will lead to robust actions. You will likely face an investigation and, if the evidence is substantiated, you’ll receive a stiff fine. It’s also possible you’ll face disciplinary sanctions.

The four outcome rules

The new standard aims to support retail customers and offer protection against misleading financial practices. You’ll need to evaluate all of your products and advice to ensure it complies with the following:

1.    Products and services outcomes

All financial products must meet the needs of retail clients. When designing products, you’ll need to clearly identify your target consumer and be able to explain how it will benefit them.

2.    Price and value

Financial services businesses have a right to make a return on their products. However, you need to balance that with the value you are offering the consumer. You may need to justify the price you’ve set to the Financial Conduct Authority.

3.    Understanding your products or services

Before finalising any new financial products or services, your team need to take a moment and put themselves in the consumer’s shoes. This will help to ensure you are providing them with all of the information they need, when they need it.

4.    Support

Support means you’re available to help your clients. They need to have multiple ways to get in touch and you need to ensure all customers receive a response within a timely manner. You’ll need to set standards behind the scenes and stick to them.  

Remember, this standard isn’t just about looking after your consumers, it’s about ensuring everything you do can be justified as not putting the consumer at risk.  

How the rules are being phased in

The initial consultations for this standard happened in 2021. After a year of discussions, the final version of the standard was created and published in July 2022. This led to an implementation phase, where the FCA agreed that all firms must implement the new rules for all new businesses starting from the 1st of July 2023.

By July 2024, the rule must be applied to all clients, existing and new. At the end of July 2024, firms must supply the first annual attestation, confirming their compliance.

How to ensure your website remains compliant

Consumer Duty not only impacts the way those operating within the financial services work directly with their clients, but the new standard also has a bearing on the information they display on their websites. Your website developer should be able to assist you with all of the changes required to ensure you stay compliant. If you do not have anyone managing your website, or you need any other assistance, WEBPRO Adviser is always here to help.

The dedicated team at WEBPRO Adviser offers all of the assistance you need to comply with Consumer Duty. We’ll work with you to ensure you’re fully compliant.

Recap: Consumer Duty focuses on protecting retail customer’s rights. It was designed to make financial products clearer and easier to understand for the general public. Complying with these rules is obligatory. Your company should already be working to this standard. Partner with WEBPRO Adviser today to ensure this is the case and use this opportunity to improve your reputation.

WEBPRO knows

In 2022, the Financial Conduct Authority issued over £215 million in fines. That figure is likely to rise as the FCA handles claims related to Consumer Duty. Don’t fall foul of this, make sure your website is compliant today.