Tim McMahon

Senior Associate Solicitor

DATE PUBLISHED: 03 Apr 2024 LAST UPDATED: 15 Apr 2024

Evidence of new FCA “Consumer Duty” beginning to bite

Following the implementation of the Financial Conduct Authority’s (“FCA”) Consumer Duty Regulations last year, the market has seen some clear indications of intent by the FCA to enforce this duty and changes by regulated entities as a result. This suggests that there are, and will continue to be, tangible increases in protection to retail clients, with the FCA’s intention to enforce this new duty.

FCA Consumer Duty

The FCA implemented the Consumer Duty Regulations on 31 July 2023, in an effort to support consumers and place a higher duty of care on businesses. The Consumer Duty Regulations apply widely to the financial industry, including to all firms with a key role in delivering retail services or have a material influence over customer outcomes, including those with no direct customer relationship.

The regulations set out a higher standard of consumer protection in financial services. Firms should assess, test, understand, and evidence the outcomes their customers are receiving. This is to allow businesses to make positive outcomes for consumers central to their firm’s culture, strategy and business objectives. In broad terms, the focus of the regulations is to ensure that consumers are being fairly treated by FCA registered entities from the beginning to the end of their customer journey.

Recent Activity

Since implementation, the market has witnessed the FCA being particularly vocal in demonstrating the tangible effect of the Customer Duty. In November 2023, the FCA published the outcome of a review which found entities should do more to prevent consumer fraud and to deliver good consumer outcomes when it does occur. Concurrently, guidance for crypto firms was published, which is an emerging area that carries a particularly high risk of fraud. More recently, the FCA has requested information from firms about how they are continuing to deliver ongoing advice services in accordance with the Consumer Duty. This appears to be an escalation from the FCA, considering firms have now had some time to adjust to, and implement, the Consumer duty.

In summary, the FCA’s approach to the Customer Duty appears to be extremely focused and committed to ensuring that customers are receiving good value from regulated entities. This will no doubt be welcomed by customers, while regulated entities will need to be ensuring that they are implementing the requirements of the Customer Duty, given it will also apply to products entered into before the Duty came into force last year. There has been market news which indicates that regulated entities are already taking steps to prepare, not just for current and future compliance, but to compensate customers for what will now be considered historical poor service.

What does the Duty mean for regulated entities?

It seems reasonable to expect that Customer Duty will be something that the FCA will be very active on enforcing over the coming years. From 31 July 2024, the Customer Duty will apply to closed products. In this regard, the FCA have recently indicated that firms should already have a “clear roadmap to comply”. Accordingly, it is very clear that the application of the Customer Duty will be extensive.

For regulated firms, the FCA appears to be placing onus on seeing commitment and effort to the implementation of the Customer Duty. Ultimately, there needs to be a demonstration of firms focusing on providing good outcomes for consumers. One way of analysing this will be through greater scrutiny of board reports showing proactivity by regulated firms.

What does the Duty mean for Consumers?

Being a customer of financial services, you require trust and confidence in the services you are purchasing. This is key to achieving good outcomes, and for customers to believe that you are benefiting them, to retain them.

As a result of the new duty, firms should be acting honestly and fairly to avoid causing likely harm to customers and instead should be supporting you with your financial decisions.

Under the duty, you should expect:

  • the support you need, when you need it;
  • communications you understand;
  • products and services that meet your needs and offer fair value; and
  • products and services that are right for you.

How Can Ellis Jones Help?

Ellis Jones’ specialist Banking and Finance Litigation team has substantial experience in advising on banking and finance related disputes. For consumers, we are able to substantively assess your circumstances and guide you through the various processes to seek compensation. Conversely, FCA regulated entities may wish to take legal advice on the implications of the Consumer Duty Regulations to ensure full compliance and ultimately deliver the best service to their clients.

If you wish to discuss a potential instruction, please contact Tim McMahon, Senior Associate in the Banking and Finance Litigation Department, on 01202 057737 or send an email to Tim.mcmahon@ellisjones.co.uk to discuss.


About the authors

Tim McMahon

Tim is a Senior Associate Solicitor in our Banking & Finance department and is based in the London office. To find out more about Tim’s expertise, you can view his profile here.

Lauren Foster

Lauren is a Paralegal in our Banking & Finance department and is based in the London office. To find out more about Lauren’s role, you can visit her profile here.

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