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  • Robert Bell

The Final Week of Preparations for the Consumer Duty

There is now just under a week to go until the Consumer Duty is live. Expected to bring extensive changes across the industry, the Duty means that financial services firms will now need to demonstrate that they aren’t just treating customers fairly but that their actions – including design of products and monitoring activities – ensure that customers receive good outcomes.

It’s important that, in the shift from ‘fair’ to ‘good,’ the foundational concept of fair treatment isn’t lost. That should still underpin the culture of all financial services firms as we start to get used to business under the Duty. A new focus on good outcomes is the next step – rather than documenting compliance with a set of rules, we’ll now need to be able to demonstrate the outcomes that customers receive, how we have taken steps to make sure those outcomes are good, and what we do when we find they aren’t.

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This will change long-held practices in a lot of ways, both big and small. Take communications, for example. In the past we might have taken pains to re-write sections of a Notice of Sums in Arrears letter to make it clearer for our customer base. So far, so good. Now, we’ll need to show how we know it’s clear and the content is understood by our customer base.

There is still some concern about the exact onus on firms. The Consumer Duty is explicitly about achieving good outcomes for customers, but the FCA has made it clear that the Duty does not make firms responsible for guaranteeing a good outcome for each customer, but it is about changing ways of working to help groups of customers achieve those outcomes.

The Duty will be proportionate. It won’t make firms responsible for customer choices – that would be going against the ethos of the Duty, which aims to make sure that customers are actively given information they need to make informed choices. Instead, it’s about a set of actions that will help customers to make decisions that help them reach their goals. Having said that, it is important not to underestimate the changes that the Duty will introduce to the industry.

The proactivity that has previously been the reserve of the very highest standard of care for customers is now going to be the norm. Making sure that customers understand the risks of potential products and actions has, in recent years, been the standard to meet, but that will now extend to being clear about how that might impact on their own situation and giving information that will help the customer to get what they need to meet their own goals.

So going into this final week before the Duty becomes business as usual, we need to make sure that we’re on track to meet the FCA’s expectations. We should now be at the point where reviews and assessments have been completed, and Management Information that will be used to set and measure your firm’s individual goals has been chosen and produced.

Now is the time to tie together all of those open product reviews, value assessments and MI production into your firm’s Consumer Duty policy: we have a template to help you formulate that final Policy document.

Underpinning your approach to the Duty must be a sound Consumer Duty Policy. Our template is available, along with our new, updated, product approval process and a new product review template here. Both are now streamlined and come with guidance on how to complete.


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