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FCA’s Consumer Duty will [NOT] lead to a major shift in financial services

Updated: Jul 31, 2023

The much trumpeted update in Rules for firms in financial services is under-whelming, but it starts 31.7.23.

Will some of our cherished institutions, like banks, change their ways? very doubtful.

This is the summary paragraph at the start of the document:-

Our [FCA] expectations of firms under the [Consumer] Duty

1.9 Firms should:

put consumers at the heart of their business and focus on delivering good

outcomes for customers

provide products and services that are designed to meet customers’ needs, that they know provide fair value, that help customers achieve their financial objectives and which do not cause them harm

communicate and engage with customers so that they can make effective, timely and properly informed decisions about financial products and services and can take responsibility for their actions and decisions

not seek to exploit customers’ behavioural biases, lack of knowledge or

characteristics of vulnerability

support their customers in realising the benefits of the products and services they buy and acting in their interests without unreasonable barriers

consistently consider the needs of their customers, and how they behave, at every stage of the product/service lifecycle

• continuously learn from their growing focus and awareness of real customer outcomes

ensure that the interests of their customers are central to their culture and purpose and embedded throughout the organisation

monitor and regularly review the outcomes that their customers are experiencing in practice and take action to address any risks to good customer outcomes

ensure that their board or equivalent governing body takes full responsibility for ensuring that the Duty is properly embedded within the firm, and senior managers are accountable for the outcomes their customers are experiencing, in line with their accountability under the Senior Managers and Certification Regime (SM&CR)

So what's the problem?

Well the fact that you get to Page 24 before they start a section called "The Consumer Principle " says something about the wrong focus of this document.

Reading the text...


4.1 The Consumer Principle, Principle 12, requires firms to ‘act to deliver good outcomes for retail customers’.

4.2 It sets a higher standard than both:

• Principle 6 – A firm must pay due regard to the interests of its customers and treat them fairly.

• Principle 7 – A firm must pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.

4.3 Principle 12 reflects the positive and proactive expectations we have of firm conduct, and our desire for firms to think more about customer outcomes and place customers’ interests at the heart of their activities.

4.4 It should prompt firms to ask themselves questions such as, ’Am I treating my

customers as I would expect to be treated in their circumstances?’ [haha] or, ’Are my customers getting the outcomes from my products and services that they

would expect?’.

4.5 As we set out in Chapter 2, Principle 12 imposes obligations on firms towards

customers of products and services, irrespective of whether the customer is a direct

client of the firm.

4.6 Firms should consistently challenge themselves to ensure their actions are compatible with customers’ interests and financial objectives.

4.7 In this chapter, we provide some over-arching guidance on Principle 12, how it should be interpreted, and its relationship with the cross-cutting rules.

What this means for firms

4.8 Principle 12 focuses on customer outcomes, and requires firms to:

• pro-actively act to deliver good outcomes for customers generally and put

customers’ interests at the heart of their activities

• focus on the outcomes customers get, and act in a way that reflects how

consumers actually behave and transact in the real world, better enabling them

to access and assess relevant information, and to act to pursue their financial


• ensure they have sufficient understanding of customer behaviour and how

products and services function to be able to demonstrate that the outcomes that

would reasonably be expected are being achieved by those customers


5.14 Through their consumer support, firms would also not be acting in good faith if they operate systems or processes that they know frustrate or prevent customers enjoying the use of their products (see Chapter 9). An example of this would be designing websites or mobile phone applications to manipulate or subvert consumers’ choices through harmful leading questions.

..or not publishing a phone number/real email address in order to make it harder for punters to contact the firm? surely not.

5.23 Examples of foreseeable harm include: • consumers being unable to cancel a product or service that isn’t right for them anymore because the firm’s processes are unclear or difficult to navigate

....or not publishing a phone number/real email address in order to make it harder for punters to contact the firm? surely not.

5.35 Through consumer support (see Chapter 9) firms should act to avoid foreseeable harm by:

• adopting a flexible consumer support approach that takes account of the needs of customers with characteristics of vulnerability

using appropriate friction in customer journeys [?!] to give customers sufficient opportunity to understand and assess their options

..or not publishing a phone number/real email address in order to make it harder for punters to contact the firm? surely not. etc.

The whole policy paper is an example of what you get when you apply an infinite number of civil servants to a simple problem.

Abell Morliss says a basic Consumer entitlement should be:-

  • every supplier of Regulated services should clearly:-

  • publish their real address - no PO Boxes to hide behind

  • maximum response time of three business days to letters

  • issue a real standard-rate telephone number that is answered by a live person at least 09.00-17.00 mon-fri

  • Always answer telephone calls with a live person within 30 secs.

  • Record all incoming/outgoing calls, and deliver a recording of such calls to the Consumer upon request.

  • issue a real email address that Consumers can use to communicate with their service provider

  • maximum response time of two business hours to emails

  • clearly state what your business hours are, and that in those hours ALL services/contact systems must be available

  • IF you use a WebChat system this must be manned adequately, and all messages received get maximum response time of one business hour to messages

  • IF you issue statements and correspondence online, these documents to be available online for at least 6 years after issuance, in compliance with the general business duty to retain paperwork. This to apply EVEN if you cease to be a customer of that institution

  • All Complaints systems to be simple to use, and performance of the institution attending to complaints to be published also.

  • Publish clearly on your webshite a dashboard of your performance against these [FCA] defined standards.

  • probably more, but that's a start.

All comments/bright ideas (C)Abell Morliss International Ltd.

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FCA fg22-5cd
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