Are you an entrepreneur, founder, or start-up? 👩💻👨💻
Do you target retail customers with your financial products or services? 🎯
If so, then you need to be aware of the Consumer Duty, a new requirement from the Financial Conduct Authority (FCA) that aims to deliver good outcomes for retail clients.
So what exactly is the Consumer Duty?
It consists of a new consumer principle and three rules that require firms to act in good faith, avoid causing foreseeable harm, and enable and support retail customers to pursue their financial objectives. There are also additional rules and guidance linked to four outcomes related to the quality and value of products and services, consumer understanding, and support for consumers.
Who does it apply to?
The Consumer Duty applies to all UK regulated firms targeting retail customers, including those in the e-money and payments sector. It also applies to all firms in the distribution chain with a key role in delivering retail customer outcomes, even if they have no direct customer relationship. This includes firms that can influence the design or operation of retail products or services, communications with retail customers, and customer support for retail customers.
When do you need to be compliant?
From July 31, 2023, the Consumer Duty applies to all new products and services and existing products and services that remain on sale or open for renewal. From July 31, 2024, it applies to all closed products, meaning those that are no longer marketed or distributed to retail customers or open to renewal. However, if existing customers can continue to make payments under the existing product terms, this would still be considered closed as long as the product or service is not open to new customers.
What does this mean in practice?
Firms will need to build an implementation plan to achieve compliance and should ideally appoint a “Consumer Duty champion” at board level who is responsible for ensuring that the Consumer Duty is discussed regularly and raised in all relevant discussions. Note that the FCA expects all existing in-scope firms to have already had their implementation plan in place since October 31, 2022.
As an entrepreneur, founder, or start-up, it’s important to stay informed and take necessary steps to comply with regulatory requirements to ensure the best outcomes for your retail clients.
If you want to know more about how the Consumer Duty may impact you and what you need to do in order to be compliant, you are welcome to get in touch with our awesome team of Fintech specialists.
Call us on: 0333 050 9794