Summary
The Financial Conduct Authority (FCA) outlines the implementation of Consumer Duty, highlighting areas of good practice and improvement needed among firms. The Duty, effective from July 31, 2023, aims for firms to deliver good outcomes for retail customers, emphasizing the need for proactive measures against consumer harm.
Key Points
- Consumer Duty came into effect for open products and services on July 31, 2023.
- Firms are encouraged to deliver better outcomes for customers, with some lagging behind.
- The Duty requires firms to act in good faith, avoiding foreseeable harm, and support customers’ financial objectives.
- FCA highlights good practices and areas needing improvement in culture, governance, monitoring, and treatment of vulnerable consumers.
- Focus on product and service design to meet consumer needs and ensure fair value.
- Importance of improving customer understanding and support throughout their financial decision-making.
- Encouragement for firms to use data and governance to address issues proactively.
- The need for better strategies in identifying and supporting vulnerable consumers.
- Emphasis on the design and distribution of products to meet specific consumer needs.
- The importance of ensuring products and services offer fair value.
- Encouragement for clear communication to aid consumer understanding.
Key Statistics
- 49% of portfolio managers and 69% of stockbrokers identified no vulnerable customers in their base.
- 50% likelihood of being classified as vulnerable at some point, indicating a need for broader consideration of vulnerability.
Key Takeaways
- Firms must continuously work towards delivering good outcomes for retail customers.
- Proactive measures against consumer harm are crucial.
- Culture, governance, and monitoring play significant roles in fulfilling Consumer Duty.
- Identifying and supporting vulnerable consumers is essential.
- Product and service design should focus on consumer needs and objectives.
- Ensuring fair value in products and services is mandatory.
- Clear communication is key to enhancing consumer understanding and decision-making.
- The implementation deadline for closed products and services is July 31, 2024.
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