The Consumer Duty (‘the Duty’) rules and guidance were introduced by the Financial Conduct Authority (‘the FCA’) in July 2022. Following a period of implementation, the rules then came into effect in July 2023.

The Duty sets higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first. The Duty is comprised of three components:

1. Consumer Principle – this reflects the overall standard of behaviour expected from firms by the FCA

2. The ‘cross-cutting rules’ which develop the FCA’s expectations for behaviour and the requirements that explain how firms should act to deliver good outcomes

3. The ‘four outcomes’ – a suite of rules and guidance setting out expectations in four areas that represent key elements of the customer relationship. These are:

• Governance of products and services

• Price and value

• Consumer understanding

• Consumer support

In May 2024, the FCA issued six new ‘Dear CEO letters’ concerning the Consumer Duty reiterating the need for firms to ensure compliance with the Duty.

So, what are the 'best practices'?

This list includes several examples of ‘best practices’ that we’ve identified from our reviews to date:

• Appointing a Duty ‘board champion’ - this helps ensure a greater focus on the end customer at board level.

• Provision of training (including both Consumer Duty and Vulnerable Customers) across all levels – this may take a different form for different roles within the business (i.e. those in customer facing roles, and those responsible for governing the Duty implementation).

• Documenting the ‘customer journey’ - specifically including any key stress points

• Adopting an approach of continuous improvement including constant review of data and metrics to better understand customers and ‘customer outcomes’.