FCA outlines Consumer Duty focus areas for 2024/25

In response to industry feedback that it would be useful to have all Consumer Duty areas of focus listed together, the FCA has published its list of priorities for the remainder of the year and in to 2025. It is keen to stress that this is not additional supervisory work - rather it is pivoting ongoing supervision towards the Duty. Firm-specific supervisory work on the Duty will also continue in tandem. 

The FCA outlines four key areas of focus:

1. Embedding the Duty and raising standards.
2. Enhancing understanding of the price and value outcome.
3. Sector-specific priorities.
4. Realising the benefits of the Consumer Duty.

The final point is largely covered by the Call for Input asking where the FCA can use to Duty to simplify wider requirements on retail firms, which closed in October. The FCA plans to set out its next steps here in Q2 2025. As to the remaining three, there is little new but some interesting developments of themes we have seen grow since the Duty came into force in 2023.

• On ‘Embedding the Duty’, the FCA confirms that it will publish feedback on three cross-cutting projects in Q4 2024 and Q1 2025. These are: the review of board/governing body reports and complaints and root cause analysis; a review of treatment of customers in vulnerable circumstances; and a review of consumer support outcome and supporting informed decision-making. Feedback on the first annual board reports has been eagerly awaited since early Autumn. Given the paucity of practical guidance on the look, feel and intended depth of these reports, indications of good and poor practice here will be welcome.

• In the payments sector, the FCA has announced further work in 2025 on the clarity of FX pricing, focusing initially on money remittance services and account to account transactions. This follows feedback from its review of how payments firms have enbedded the Duty, in which the FCA voiced concerns that where firms offer FX services and use volatile markets to set high charges for FX forwards or conversion facilities, this risks their products ceasing to be fair value.

• In the investments space the FCA will publish a consultation on high-level proposals on targeted support in Q4 2024, as part of a plan to tackle the advice-guidance boundary. The FCA also repeats its plan to engage with firms failing to identify vulnerable customers in the wealth sector. 

• Building on earlier work in the insurance sector, including on outcomes monitoring, the bereavements process and pension transfers and GAP insurance, the FCA will also be looking at claims handling arrangements. Feedback on this study should be published in Q2 2025.

• The FCA reminds firms that it will pubish final rules on extending the SDR regime to portfolio managers in Q2 2025. Positioning sustainable finance policy as an area of Consumer Duty focus underlines the importance of viewing product development and communications in the ESG space through the lens of the Duty. 
   

After a relatively quiet Autumn in terms of specific feedback from the FCA on the Duty, it appears to be picking up the pace again. 2025 looks set to bring plenty more for industry to engage with.