The much awaited second consultation paper from the Financial Conduct Authority (FCA) on new Consumer Duty is finally here.
Earlier in the year, the FCA published its first consultation paper (CP21/13: A new consumer duty), setting out its high-level proposals to set a higher standard of consumer protection in retail financial markets. Its aim is to ‘drive a healthy system where firms can thrive and consumers can make informed choices about financial products and services’.
The second consultation paper sets out the FCA’s proposals in more detail and has been revised in light of the feedback received on the first consultation. The principal headlines are:
- a new Consumer Principle replacing Principle 6 (treating customers fairly) and Principle 7 (communications with clients must be clear, fair and not misleading) for retail customers;
- cross-cutting rules requiring firms to:
- act in good faith
- avoid foreseeable harm
- enable and support retail customer to pursue their financial objectives
- rules relating to the four outcomes covering:
- governance of products and services
- price and value
- consumer understanding (previously referred to as the communications outcome)
- consumer support (previously the customer services outcome)
- no private right of action to be introduced at this time
- new rule to be added to COCON requiring all conduct rules staff to “act to deliver good outcomes for retail customers”
- consultation closes on 15 February 2022 with the new rules published on 31 July 2022 and
- implementation period starting on publication of final rules and ending on 30 April 2023.
A number of Shoosmiths specialists formed a Consumer Duty Group earlier in the year to work together to formulate a response to the first consultation. Our group will be formulating a response to the second consultation to the FCA in line with the deadline of 15 February 2022. We are committed to ensuring we provide support to all our clients, helping them to understand how the proposed changes will affect them and assist them in becoming compliant.
For more information on the new Consumer Duty, please visit our dedicated hub: Consumer duty hub. The hub contains our response to the first consultation and podcasts and articles recently published on this developing subject. Watch this space for more from us on what this means for your business.
Please do not hesitate to contact any of our experts to discuss the new Consumer Duty and how it may impact your business.