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Your Journey to Consumer Duty Compliance

On 31 July 2023, the Consumer Duty will apply to all regulated and ancillary activities of firms authorised under FSMA, in relation to products and services. Crucially, it applies across the distribution chain, and there are slightly different expectations for firms that are manufacturers and firms that are distributors. With less than 11 months to go, affected firms first have to grapple with how their firm is categorized under the Duty and how the Duty will affect them.


The Duty introduces Principle 12, the first new Principle since the Principles for Businesses were introduced. It comes with a host of guidance in a new section of PRIN that makes clear that the breadth and depth of the changes that firms will need to get to grips with are vast.


And that’s not all. The Consumer Duty also includes three new cross-cutting rules and four outcomes that firms must be able to evidence achieving.

The SMCR, this is not. The Consumer Duty applies to almost everything a firm does, and certainly to the processes, ethics and data analysis around its products and services. The end goal is to ensure that the firm’s customers are well looked after, and more than that, that each firm actively delivers good customer outcomes.

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Principle 12 is the first of the three key elements of the Duty and sets the standard of behaviour required. The FCA provides more guidance and rules around this Principle in a new section of PRIN – 2A – which will be published in the Handbook following the 31 July 2023 implementation date.


There has been some confusion around which firms the Duty will apply to. The FCA states that it applies to “all firms that have a material influence over, or determine, retail customer outcomes.” In short, this captures a significant proportion of financial services firms. Crucially, the Duty applies “across the whole distribution chain,” including those firms dealing with prospective retail customers as well as actual retail customers – so not only firms whose business is customer facing.


The FCA also clearly sets out that the Duty will apply to both regulated and ancillary activities of firms authorised under FSMA, the Payment Services Regulations 2017 and the E-money Regulations 2011.


Affected firms will need to understand the new requirements and how they apply to their firm, including the impact on PRIN and the Conduct Rules. If PRIN 12 applies, then Principles 6 and 7 are disapplied and if the Duty applies, then Tier 1 Conduct Rule 4 is replaced with wording of a higher standard.


The ‘type’ of firm also matters. Which regulations and expectations apply will depend on how the firm interacts with customers, and whether they are classed as a distributor or a manufacturer. The Duty is complex, and firms will need to spend the 11 months understanding both the impact on their firm as well as embedding the process changes and updates.


The changes will impact the whole customer lifecycle, with the Duty imposing the requirement for firms to analyse how well they deliver good outcomes for customers in practice, both at pre- and post-sale.


Between now and the implementation date, there are a number of reviews and assessments that firms must consider and undertake, with a view to making any required changes before the end of July 2023. This is a huge task – whatever the nature of the firm – building frameworks, conducting reviews and then testing tools, systems and communications all before the end of next summer to meet these significant new expectations is a must. The risk of regulatory censure is too great.


An excellent starting point is a roadmap. Setting out a series of actions helps to visualize what is needed, as well as what the Consumer Duty will look like in practice. The roadmap should be based on the requirements set out in the new section of PRIN. We have created a roadmap that helps to guide firms through the steps they need to be taking to achieve compliance with the Consumer Duty.


You can download our Roadmap to Compliance here.


Additionally, firms will need to undertake value assessments, product reviews and test communications. Again, all these have very specific requirements as set out in PRIN. To help you understand more we have created a set of free-to-watch webinars as well as product approval templates, value assessments and product reviews.


You can watch our first two webinars here:



For more information, contact Rob Bell: robert.bell@rbcompliance.co.uk.



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