What is consumer duty?

Published in July 2022, the Consumer Duty goes beyond the existing Treating Customers Fairly (TCF) framework and requires FCA regulated firms to ‘act to deliver good customer outcomes’.

The rules comprise:

A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers
Cross-cutting rules, providing greater clarity on the FCA’s expectations under the new Principle and helping firms interpret the four outcomes (see below)
Rules relating to the four outcomes the FCA wants to see under the Consumer Duty. These represent key elements of the company-consumer relationship which are instrumental in helping to drive good outcomes for customers

These outcomes relate to:

Products and services
Price and value
Consumer understanding
Consumer support

These rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met

What are we doing?

At Ansvar we put the customer at the heart of everything we do and already have well-established frameworks embedded into our business, which ensure adherence to existing regulatory requirements. Adherence to our Customer Promise, ensures we remain focussed on delivering the highest standards of sales and service across the entire lifecycle of our products and services.

Nevertheless, the new Consumer Duty has afforded us the opportunity to further review our approach and the product(s) and services you provide on our behalf. We are focusing on a number of key areas. These include:

A definition of what we mean by “good outcomes” and enhancing our measurement of our adherence to our Customer Promise to take any new obligations under the Consumer Duty into account
Engagement with our Board to shape our Consumer Duty programme
A review of all customer touchpoints including third party support and distribution to ensure customers receive the necessary support at the right time and products and services that meet their needs
Enhancements to our Fair Value Assessments to ensure our products and services offer fair value

Undertaking a review of our key customer communications to ensure we use simple, easily understood language, that is appropriate to our target audience and accessible to customers who may have specific needs
Putting processes in place to allow us to engage with our target customers and measure their responses to ensure our products, services and communications meet their needs and expectations
Enhanced performance monitoring, against the Duty’s key outcomes, to ensure we maintain the highest levels of service and support (including service and support for vulnerable customers) and processes in place to respond where further improvement opportunities present themselves

What do you, our Broker partners need to do?

Whilst our review will consider the parts of your customers’ journey that we’re responsible for, you should review the parts you undertake in accordance with the FCA’s requirements.

You’ll need to ensure your arrangements enable customers to make informed decisions by giving them appropriate information, at the right time, in a way they understand.

You may want to consider, for example, your customer contact strategy, sales processes, customer communications across all media types, premium finance, complaint handling process, and terms and conditions.

You should also ensure that customers receive an appropriate standard of support, including those with characteristics of vulnerability and deal with reasonable requests from ourselves in an effective way to enable us to support our customers

Please note that this Consumer Duty guidance is not exhaustive. We encourage you to refer to the FCA’s dedicated Consumer Duty pages on their website for more information. The FCA’s published policy statement can also be found here.

Next steps

We will be writing to all our brokers asking them to complete a short questionnaire on the processes they undertake. We will review these responses to check that we’re doing all we can to avoid harm, allow customers to pursue their financial objectives and create good outcomes.

We will continue to regularly engage with you, and this will include re/viewing how you are ensuring good customer outcomes and working with you to make any enhancements required.

If you hold a bespoke arrangement or scheme with Ansvar, there’s more you’ll need to consider. Your Ansvar Key Account Manager will be in touch soon to discuss further.

Further updates

We’ll start reporting against the new Consumer Duty outcomes from August onwards. The FCA have stated a deadline of 31st July 2023 for firms to adhere to the new Consumer Duty rules and we’re well on track to achieve this.