Consumer Duty

The FCA have issued a new Policy Statement on Consumer Duty (PS22/9). The Consumer Duty will raise the standards of care for the consumer and put greater obligations on the financial institution. The new Duty will apply to new and existing products and services from 31 July 2023 and from 31 July 2024 for products and services held in closed books.

The new Duty would not apply retrospectively but would apply on a forward looking basis to existing products or services.

The Duty is focused on four outcomes:

products and services
price and value
consumer understanding
consumer support

The Duty requires firms to consider the needs, characteristics and objectives of their customers (including vulnerability) and how they behave on each stage of the customer’s journey. They require firms to:

act in good faith
avoid causing foreseeable harm
enable and support retail customers to pursue their financial objectives

The new Duty is more onerous than the current Treating Customers Fairly guidance and will require Credit Unions to update policies and procedures, Credit Unions will be required to regularly review their products for compliance with the Duty and ensure this is properly documented.

Deadlines

There are a number of deadlines that Credit Unions should be aware of:

Further Guidance

The policy statement and related guidance can be found on the FCA website by clicking here. Credit Unions should familiarise themselves with the guidance and consider what they need to do to implement the rules.