Our Consumer Duty focus areas

Corporate documents Published: 09/12/2024 Last updated: 09/12/2024

Our priorities under the Consumer Duty for the remainder of 2024/25.

 

The Consumer Duty is one of the most significant changes to our regulatory approach in recent years. It has been in force for open products and services since 31 July 2023, and for closed products and services since 31 July 2024. 

As part of meeting our secondary objective to facilitate international competitiveness and growth, we are now reviewing our wider rules to see how we can use the Consumer Duty to simplify our requirements. 

Reducing the complexity of our rulebook could lower costs, encourage innovation and help support the risk appetite needed to support growth, ultimately boosting international competitiveness and the economy over the long-term.

Priority areas for 2024/25

On this webpage, we set out our priorities under the Consumer Duty for the remainder of 2024/25.

Affected stakeholders will largely be aware of these initiatives, but we are producing this in response to industry feedback that it would be helpful to show our Consumer Duty areas of focus in one place.

Our Consumer Duty focus covers thematic, multi-firm and market-wide work, relevant to a wide set of stakeholders. Most work is not in addition to our usual supervisory activity, but rather a pivot towards the Consumer Duty. We have not included firm-specific supervisory work nor the everyday supervisory work on the Consumer Duty, for example, understanding how firms are delivering good outcomes through the products and services they offer, including looking at any issues around closed products and services.

We have given a short description of the work and expected timelines. Timelines may change, for example, because we need to prioritise new and emerging consumer harms. We also keep these areas under review as pressures emerge on specific sectors or the industry as a whole.

We have prioritised initiatives where:

  • We believe sharing more information on good and poor practice and our expectations will benefit industry and help drive better outcomes.
  • We see the greatest need to act to address harm – or potential for harm – due to the size or urgency of that harm.  
  • We require more data to improve our understanding of the way the Consumer Duty is being embedded.

Based on this prioritisation, we have 4 focus areas for the rest of 2024/25.

1. Embedding the Consumer Duty and raising standards

Assessing across sectors how firms are implementing and complying with the Consumer Duty

We want to understand how firms are improving consumer outcomes. Where we need more data and information from firms, we’ll only ask for what we need.  

We have 3 cross-cutting projects which we are grouping into packages of publications in Q4 2024 and Q1 2025:

  • Review of board/governing body reports and complaints and root cause analysis – Assessing how firms are responding to our outcomes monitoring requirements, for example through our review of Board reports and how firms are using insight from their complaints to identify systemic issues and improve business practices.  
  • Review of treatment of customers in vulnerable circumstances – Assessing firms’ approach to the treatment of customers in vulnerable circumstances. 
  • Review of consumer support outcome and supporting informed decision-making – Looking at how firms support their customers across the customer journey and how they are using communications to support informed consumer decision-making.

Where we identify good practice, we will share it. Where there are areas for improvement, we will remind firms of our expectations and set out where they may need to accelerate progress. We will combine insights from our work where possible to make it easier for firms to understand what good and poor practice looks like.  If we identify compliance issues, we will consider appropriate action.

We recognise different firms face different challenges. We want firms to take an approach that is proportionate to their size and to the activities they undertake. Where appropriate, we will set out different approaches smaller firms could take.

2. Enhancing understanding of the price and value outcome

We know firms have found challenges in conducting fair value assessments and have questions about our expectations. We want firms to use robust analysis to assure themselves, and us, that they are offering fair value, and identify and take action where they are not. In Q3 2024, we published reflections on fair value assessments we have reviewed.  

Further priorities include:

  • Platform cash – treatment of interest of cash balances – Tackling concerns about how investment platforms and SIPP operators deal with any interest earned on customers' cash balances. We are engaging with firms where we have concerns.
  • Market study into pure protection insurance – Exploring consumers’ engagement with and understanding of the pure protection insurance products they are buying, the competitive constraints on insurers and intermediaries, and firms' incentives, behaviour and practices. We will commence this market study in H1 2025.
  • Unit-linked pensions and long-term savings – Looking at transparency of charges across the value chain and how firms assess overall product value. We expect to complete work in Summer 2025 and publish our findings.
  • Market study into premium finance – Reviewing whether people who borrow to pay for motor and home insurance are receiving fair, competitive deals. We plan to publish an interim report in H1 2025.

3. Sector-specific priorities

We have planned work to tackle areas of existing concern in sectors across the rest of this financial year and into the next. Firms should expect a general focus on their implementation and embedding of the Consumer Duty and customer outcomes as part of any supervisory engagement.

Retail banking

We have recently completed work on cash savings and access to payment accounts (PDF). In addition, we will conduct work with a specific focus in Retail Banking on bereavement and power of attorney, linked to our wider review of firms’ treatment of customers in vulnerable circumstances, which we will publish in H1 2025.

Consumer finance

  • Digital journeys assessment – Considering whether firms’ digital tools sufficiently help consumers to understand credit agreements. We aim to publish findings in H1 2025.

Payments and digital assets

We have recently completed work on how payments, e-money and open banking firms have embedded the Duty. In addition, we will examine:

  • Clarity of foreign exchange (FX) pricing in payment services Assessing the extent to which firms’ approaches help ensure consumers are able to clearly understand the price they pay for these services, in line with the Duty. Our initial focus will be on clarity of pricing in money remittance services and account to account transactions. We are planning to undertake this work in 2025.

Consumer investments

In addition to the platform cash price and value work, we are focused on:

  • Advice Guidance Boundary Review – Exploring how the Consumer Duty could help to close the advice gap so that firms enable and support consumers to pursue their financial objectives and make key financial decisions. In Q4 2024, we will publish a consultation on high level proposals for targeted support, which would allow regulated firms to provide support to pension savers in a new way. In H1 2025, we plan to consult on rules for better support for consumers in retail investments and pensions.  
  • Tackling poor identification of clients with characteristics of vulnerability by wealth managers – Engagement with firms and collaboration with industry to raise standards, drawing on the wider vulnerability review. In H1 2025 we will provide specific firm feedback and take appropriate regulatory action if necessary.  
  • The Packaged Retail and Insurance-Based Investment Products (PRIIPs) Regulation/ Consumer Composite Investments (CCIs) Regulation – Repealing and replacing the retained EU PRIIPs regulation with a new UK retail disclosure regime that works effectively for the UK’s dynamic capital markets and fosters informed retail investor participation. We will consult on draft rules in Q4 2024.

General and life insurance

We completed work looking at general and life insurance firms’ compliance with outcomes monitoring.  We published our good and poor practice report in June 2024. We also completed our work looking at consumer support in the bereavement process and pension transfers. We published our findings in November 2024. Our focus is on the price and value outcome, following on from work on GAP insurance, and as shown through our market studies planned in pure protection and started in premium finance.

In addition, we will focus on:

  • Claims handling arrangements – Understanding insurers’ claims handling arrangements and whether systems, controls, governance and oversight structures drive good consumer outcomes. We aim to publish findings in Q2 2025.

Sustainable finance

  • Sustainability Disclosure Requirements (SDR) and investment labels – Helping consumers navigate the market for sustainable investment products. We expect to publish final rules on extending the SDR regime to portfolio management in Q2 2025.

4. Realising the benefits of the Consumer Duty

With the Consumer Duty in force, we published a Call for Input covering our wider requirements on retail firms and asking where we can use the Duty to simplify them. The deadline for responses was 31 October 2024. We will set out next steps in H1 2025.