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Consumer Duty is a standard introduced by the
Financial Conduct Authority The Financial Conduct Authority (FCA) is a financial regulatory body in the United Kingdom. It operates independently of the UK Government and is financed by charging fees to members of the financial services industry. The FCA regulates financi ...
, in the UK, intended to improve
Consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...
for financial-services firms in the UK. The changes were announced in 2021 and officially came into force on 31 July 2023. The Consumer Duty has been described as the 'biggest overhaul for the UK's financial services industry in 20 years'.


Requirements

The new rule establishes a "Consumer Principle"; firms must "act to deliver good outcomes for retail customers". Affected firms should review their products and their customer journeys. This also requires effective anti-fraud controls. The UK's
Treasury select committee The House of Commons Treasury Committee (often referred to as the Treasury Select Committee) is a select committee of the House of Commons in the Parliament of the United Kingdom. The committee is responsible for examining and scrutinizing the ...
said it would scrutinise how banks comply to the rules heavily. Financial Services companies were warned that if any evidence was found of risk of harm to the consumer, this could lead to interventions or investigations, and possible disciplinary sanctions. There have been concerns that these requirements place an undue burden on smaller firms.


Components of Customer Duty

* The "Consumer Principle", which becomes the 12th Principle of the FCA's "Principles for Businesses" * The cross-cutting rules * The four outcomes: ** the governance of products and services ** price and value ** consumer understanding, and ** consumer support


Timeline

* The Consumer Duty standard evolved from Following FCA consultations in 2021; * The final version of the guidance was published in July 2022;https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf * Implementation plans should have been agreed by the firms' leadership on 31 October 2022; * Firms must implement the rule for their current business by July 2023; * Consumer Duty is applied to "closed books" by July 2024; * First annual board attestation by 31 July 2024.


See also

*
Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, Payday lo ...
*
FCA Controlled Functions The Controlled Functions of the Financial Conduct Authority (FCA) are simplifying code names given to various functions within the financial services and relating to the carrying on of regulated activities by a firm. These are specified, under sec ...
*
Financial Policy Committee The Financial Policy Committee (FPC) is an official committee of the Bank of England, modelled on the already well established Monetary Policy Committee. It was announced in 2010 as a new body responsible for monitoring the economy of the United K ...
*
Financial Services Authority The Financial Services Authority (FSA) was a quasi-judicial body accountable for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 1985 ...
*
Fraud Advisory Panel The Fraud Advisory Panel is a UK charitable organisation. Incorporated in 2001, the Panel focuses on offering advice and education to the general public on how to mitigate and avoid fraud. Panel members have provided evidence to the House of Comm ...
* Prudential Regulation Authority *
Senior Managers Regime {{Noref, date=January 2023 The Senior Managers and Certification Regime (SM&CR) applies to the United Kingdom banking sector since March 2016 and to dual-regulated insurers since December 2018. SM&CR has been put in place to reduce financial ser ...
*
Consumer protection in the United Kingdom Consumer protection in the United Kingdom is effected through a multiplicity of Act of Parliament (United Kingdom), Acts of Parliament, statutory instruments, the work of various Departments of the Government of the United Kingdom, government agen ...


References

{{reflist Consumer protection in the United Kingdom Financial regulation in the United Kingdom