The introduction of the Consumer Duty marks a significant milestone in the Financial Conduct Authority’s (FCA) ongoing efforts to enhance consumer protection in the financial services sector. This new duty establishes higher and more transparent standards of consumer safeguarding across all financial services, mandating that firms prioritise their customers’ needs above all else. The core principle driving this initiative is that financial companies must consistently strive to deliver positive outcomes for their retail clients.

Under the Consumer Duty, firms are required to put their customers’ needs first, demonstrating their dedication to acting in the best interests of their customers. For more comprehensive information, you can refer to the FCA website here.

At iPensions Wealth, we wholeheartedly embrace and implement the Consumer Duty in our business practices. In preparation for the duty, we have focused on an internal review and implementation plan to ensure we meet the requirements of the Consumer Duty, but also importantly our value of putting our customers first.

The new Consumer Duty has three key elements:

• The Consumer Principle: this reflects the overall standards of behaviour the FCA expects from firms. The wording of the new Principle is as follows: ‘A firm must act to deliver good outcomes for retail customers’
• Cross-cutting rules
• The Four Outcomes: The Customer Principle is also underpinned by a suite of rules and guidance that set more detailed expectations for firm conduct in relation to four specific outcomes: products and services, price and value, consumer understanding, and consumer support.

The Consumer Duty requires firms to put consumers at the core of their business, aiming to deliver good customer outcomes. In addition, it also introduces a number of cross-cutting rules focusing on three key behaviours which require firms to:

• Act in good faith towards customers.
• Avoid foreseeable harm to customers.
• Enable and support customers to pursue their financial objectives.

The FCA acknowledges that customers should be empowered to make their own choices and ultimately must be responsible for their own decisions. However, it does expect firms to create an environment in which customers can act in their best interests. Firms should use their knowledge of how customers behave, taking into account any customer vulnerabilities, to support them in making good decisions.

The Four Outcomes of the Consumer Duty provide rules and guidance for firms, setting expectations around the main elements of the firm and customer relationship:

• Customer Understanding: Ensure that we provide clear information at the right time with our communications supporting and enabling customers to make informed decisions.
• Price and Value: Ensure that the costs and charges represent fair and reasonable value for our products and services.
• Products and Services: Ensure that our products and services are designed to meet the needs of our target audience.
• Customer Support: Ensure that we provide a level of support that meets customers’ needs and helps support them achieve their financial objectives, including those who may be classed as vulnerable clients.