Consumer Duty
The new Consumer Duty aims to bring about a fairer, more consumer-focused and level playing field, whereby firms prioritise the consumer’s needs above all else, ensuring good customer outcomes.
Firms need to consider the diverse needs of their customers, including those in vulnerable circumstances, and make allowances where necessary. The new regulations ensure consumers get products and services which are fit for purpose, provide fair value, that they understand how to use and are supported in doing so at every stage of the product/service lifecycle.
In essence, the regulator wants to see firms putting themselves in their customers’ shoes, asking themselves questions such as ‘would I be happy to be treated in the way my firm treats its customers?’, or ‘would I recommend my firm’s products and services to my friends and family?’.
Useful Dates
Final rules (1.3mb pdf) and guidance (1.6mb pdf) were published by the FCA.
Firms’ boards (or equivalent management body) should have agreed their implementation plans and be able to evidence they have scrutinised and challenged the plans to ensure they are deliverable and robust to meet the new standards.
This information should have been shared with mortgage intermediaries (distributors) so they can meet their obligations under the Duty (relating to price & value and product & services outcomes).
This relates to:
- A new Consumer Principle (Principle 12) that requires firms to act to deliver good outcomes for retail customers.
- Cross-cutting rules requiring firms to act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives.
- Four Outcomes rules requiring firms to ensure consumers receive communications they can understand, products and services meet their needs and offer fair value, and the support they need.
Firms must also ensure the new Conduct Rule is implemented.
By the deadline, intermediary firms to have:
- completed their fair value and target market assessments (as a distributor)
- take the information supplied by manufacturers (lenders) and factor it into their own fair value and target market assessments
At the end of the implementation period, boards (or equivalent management bodies) should assure themselves that their firm is complying with their obligations under the Duty and ensure the firm had identified any potential gaps or weaknesses in their compliance and any action needed to remedy this.
Fair value statements
The new Consumer Duty regulations are in full swing, with milestone deadlines already upon us, including Fair Value Statements being produced by lenders. Lenders will be producing evidence that their products offer fair value to the end customer.
To help you ensure your clients are getting fair value, and to help you fulfil your Consumer Duty requirements, we’re collating the Fair Value Statements of all lenders on our panel.
To access them, head over to ClubHub and log in as usual. Not a ClubHub user? It’s simple to register using the link below, you’ll just need your agency number to hand.
Log in here: https://sso.mc.legalandgeneral.com/Identity/Account/Login
Register here: https://sso.mc.legalandgeneral.com/Identity/Account/Register
Once you’ve successfully logged in, click the heading ‘Fair Value’.
Here you’ll see all available Fair Value Statements by lender name. As more lenders add their Fair Value Statements to the system, you’ll see them appear here, so please check back regularly. You’ll be able to download PDFs to evidence your research.
If you have any questions about accessing or using ClubHub, please use the Live Chat facility or call our Mortgage Support Services line on 0345 026 0092.
*Please note, all screenshots are for illustrative purposes only and do not represent the lenders that have supplied their Fair Value Statements.
Useful Resources
Inside FCA Podcast: Understanding the Consumer Duty products and services outcome
Inside FCA Podcast: Explaining the Consumer Duty consumer understanding outcome
Inside FCA Podcast: What does the Consumer Duty consumer support outcome mean?
Inside FCA Podcast: What the Consumer Duty means for authorisation
Call of Duty: How putting customers front and centre will help industry innovate