Our approach to Consumer Duty
What is the Consumer Duty?
The FCA’s Consumer Duty is designed to set higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first.
It builds on the FCA’s existing principles with the introduction of Principle 12: “a firm must act to deliver good outcomes for retail customers”.
This principle is supported by three cross-cutting rules and four customer outcomes.
You can find out more about the Consumer Duty itself on the FCA’s Consumer Duty page.
What are the three cross-cutting rules?
Act in good faith towards retail customers
Good faith is defined as “a standard of conduct characterised by honesty, fair and open dealing and acting consistently with the reasonable expectations of retail customers”.
Avoid causing foreseeable harm to retail customers
Firms are only responsible for addressing harm when it is reasonably foreseeable, defined as whether a prudent firm acting reasonably would be able to predict or expect the ultimately harmful result of their action or omission in connection with the product or service.
Enable and support retail customers to pursue their financial objectives
This includes acting to empower retail customers to make good choices in their interests by creating the right environment. Financial objectives are those connected to the product bought.
How are we responding?
We’ve completed a detailed gap analysis across all products, services, communications and processes to evidence they comply with the new Duty, overseen by our Group executive sponsor:
- We’ve identified and implemented actions to validate that our products and services are compliant for the 31 July 2023 regulatory deadline.
- We’ve embedded enduring frameworks and policies across the Legal & General business and culture to ensure our products and services continue to deliver good outcomes for our members.
- We’ve established action plans for further review and enhancement opportunities.
The four consumer outcomes
All products and services for retail customers are fit for purpose, designed to meet consumers’ needs, characteristics and objectives, and distributed appropriately.
Our response
The target market and product information is now available to distributors. We already regularly review our products and services and have developed our governance processes to reflect the broader scope of the Consumer Duty regulations. These include the FCA’s higher expectations regarding the consideration of the needs of the target market, including vulnerable customers, and to demonstrate good consumer outcomes more clearly.
Consumers receive fair value (there is a reasonable relationship between the price paid and benefits received).
Our response
We have undertaken fair value assessments across all products required under the Duty and will publish the fair value assessment outcome annually. This year’s results are shown in the fair value assessments below.
Our approach of assessing fair value involves established quantitative and qualitative measures to ensure we assess the full scope of customer value. Where assessments evidence a product operates outside of acceptable thresholds against any of these metrics, we will take appropriate action.
To support and enable consumers to make informed decisions about financial products and services.
Our response
We aim to ensure that retail-facing communications are clear and understandable, whether written, digital, or phone-based. To support this, our communications are assessed and tested regularly in accordance with our specifically designed policies.
To provide a level of support that meets consumers’ needs throughout their relationship with the firm.
Our response
We’re reviewing and monitoring our customer journeys to support customers in achieving good outcomes. This is reinforced by an established program of training, oversight and feedback for customer facing staff.
We’re also improving how we record and react to vulnerable customers to ensure they’re appropriately supported.
Fair value assessments
| Product | Fair value assessment | Assessment completed by |
|---|---|---|
| WorkSave Pension Plan PDF size: 687KB | Pass | Independent Governance Committee |
| WorkSave Pension Plan - Self Investment | Pass | Legal & General |
| WorkSave Mastertrust PDF size: 395KB | Pass | Mastertrust Trustees |
| WorkSave Buy Out Plan PDF size: 599KB | Pass | Legal & General |
| Group Stakeholder PDF size: 497KB | Pass | Independent Governance Committee |
| Legal & General Personal Pension PDF size: 515KB | Pass | Legal & General |
| WorkSave ISA PDF size: 631KB | Pass | Legal & General |
We will update this information if the outcome of these assessments change, at the earliest opportunity.
If you want to find out more about the way we’re fulfilling our obligations for Consumer Duty, please contact your usual Legal & General representative.