The Consumer Duty: twelve highlights to kick off 2023

Did you miss our “Twelve Days of Consumer Duty”?

We counted down to Christmas by exploring twelve key questions about this new regime midway through firms’ implementation efforts.

Here’s a highlight from each day to bring you right up to speed:

1. Rules amendments are imminent, including to bring some activities within scope at the last-minute.
2. You’re likely in scope if you have an “arrangement” with a non-retail purchaser that, for example, will add your product into another product and onward sell it to retail.
3. The concept of “material influence” plays a key gatekeeping role when it comes to scoping – and it’s more of a continuum rather than a binary analysis.
4. The Consumer Duty contains enforceable rules about vulnerable customers.  Focus on them, especially as cost-of-living pressures mount.
5. Vulnerability can arise outside mass market retail business – it’s at least technically possible for a corporation to be a vulnerable customer.
6. “Foreseeable harm” may arise in the payments context e.g. around withheld or irrecoverable funds and financial difficulty through mis-use of a credit product.
7. If you have Consumer Duty and non-Consumer Duty business, you might consider voluntarily applying the Consumer Duty to the latter to ease your operational compliance burden and protect you should it fall within scope later.
8. Move beyond scoping and get started on your implementation work.  Time is short.
9. The Board Champion isn’t on the hook for Consumer Duty implementation; instead, their role is to ensure that the Consumer Duty is raised regularly at senior levels.
10. The Consumer Duty goes beyond TCF: it is wider in scope, more onerous, and turns significant volume of guidance into enforceable rules.
11. Exercise sufficient control and oversight over outsourced third parties e.g. those providing customer service.
12. Do what is reasonable to obtain necessary information from out-of-scope firms; if they are not forthcoming, consider whether you can comply with the Consumer Duty on the basis of the information you are able to obtain.
13. Yep, we’ve got a bonus number 13.  The FCA’s latest guidance gives greater clarity on information sharing obligations, stresses the need for additional care given to vulnerable customers, and recommends that firms start customer outcomes monitoring before the implementation deadline.  And watch this space for a package of FCA portfolio and sector-specific letters to firms on implementation expectations – these should land early in 2023.

Visit our webpage for all our insights on the Consumer Duty including our entire Twelve Days series, webinar recordings, publications, podcasts and other blog posts from us, or reach out to us to continue the conversation.