FCA Consultation CP21/36: A New Consumer Duty
On 7th December 2021 the FCA released CP21/36, a consultation to the industry with proposed updates and strengthening of Consumer Duty rules. This consultation provided further details of Consumer Duty rules and addressed responses to the original consultation paper, CP21/13, which built on the initial discussion paper DP18/05 and the resulting feedback statement FS19/02.
CP21/36 – A New Consumer Duty – Parties who should take note
- Regulated firms, including electronic money institutions, payment institutions and registered account information service providers;
- Consumer organisations and individual consumers;
- Industry groups/trade bodies;
- Policy makers and regulatory bodies;
- Industry experts and commentators, and;
- Academics and think tanks.
Aims of CP21/36
The New Consumer Duty is seeking to build on the FCA’s 2021/22 Business Plan by actively protecting consumers, with all five objectives within the plan having a consumer benefit. The FCA is seeking to develop a fairer, more consumer-focused industry environment, and to level the playing field by:
- Consistently placing consumers interests at the centre of business and aligning focus on delivering good outcomes for consumers;
- Developing competition that will provide market-wide benefits, with consumers being attracted and attained by high-standards, and;
- Consumer products become more transparent, being fit for purpose, and provide value, allowing consumers to make informed decisions.
These aims are looking to re-align the industry with the consumer objectives of the FCA, whilst also protecting the consumers from harm. Results from the Financial Lives Survey 2020 showed that only 42% of adults had confidence in the UK Financial Services Industry, with only 35% agreeing that Financial Firms are honest and transparent, highlighting the need to address these areas and improve consumer outlook.
The FCA has given a detailed breakdown of the proposed changes it would like to develop, with potential to add to the FCA handbook. These can be found in Annex 1 and 2 of CP21/36. The most notable development that the FCA is looking to implement is the introduction of a 12th Principle, a new Consumer Duty principle, namely:
- A firm must act to deliver good outcomes for retail customers.
This principle will cut across multiple elements of firms’ operations and will help the FCA to deliver the aims that are set out above. The FCA is demanding higher expectations of care from firms in relation to consumer outcomes. This development aligns with the FCA’s move to be more assertive, innovative, and adaptable with their regulatory approach. Under the new Consumer Duty proposition, the FCA would expect firms and supervisors to be increasingly focused on the outcomes for consumers and their experiences. Firms would need to assess and be able to evidence to whom and how they are providing good outcomes for consumers, evidencing the new data-led approach the FCA has developed.
How can Complyport Help with CP21/36
Being at the forefront of compliance and regulation, Complyport can assist firms in meeting their responsibilities under the FCA’s consumer duty requirements. Depending on your firm’s progress in this space, Complyport can provide a health check on your firm’s consumer duty principles and their effectiveness. Within this we would look at your firm’s products, how they are marketed to and accessed by your customers and your complaints handling procedures, root cause analysis and remedial action plans.
Following this assessment, our experienced compliance consultants can help your company put in place the right policies and procedures to ensure you are meeting the on-going consumer duty requirements. Additionally, our team can review your staff’s skills and capabilities when it comes to consumer duty, vulnerable customers management, Treating Customers Fairly (TCF) and staff conduct to highlight any knowledge or skill gaps so as to implement & deliver a suitable training plan.
If you are interested in how we can support you with consumer duty compliance, please contact Jonathan Greenstein now on email@example.com.
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
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