The FCA published and updated their recommendation on Consumer Duty implementation on 27 February 2025. Below is a summary bullet point guide for busy asset managers of the key implementation expectations of how/what firms need to do to deliver good Consumer Duty outcomes. 

1. SUPERVISIONS AND ENFORCEMENT:

• FCA expects and will prioritise the most serious breaches (harm/risk of harm) and act swiftly and assertively (interventions or investigations, and/or disciplinary sanctions).

• FCA will not retrospectively apply Consumer Duty.

2. OUTCOMES MONITORING:

• FCA expects firms to assess, test, understand, and evidence, the outcomes their customers are receiving. It would prove difficult to be compliant otherwise.

• Firms need to use judgement and tailor their data sources and MI used as evidence to support the outcomes (based on firm size, client base, and products offered).

3. THE ANNUAL BOARD REPORT:

• FCA requires the Board to annually review and approve a report on the Consumer Duty outcomes received by their retail customers. FCA expects the Board to evidence causes of good/poor outcomes, any remedial actions taken, and re-alignment of business strategy, if required. 

• The report can be in any format and should be objective and have independent oversight. FCA may ask to review your board report.

4. CONSUMER DUTY BOARD CHAMPIONS:

• From 27 February 2025, FCA no longer requires firms to have a Duty Champion given that the Duty should be well-embedded in firms’ business strategy, discussions, processes (risk + audit), and policies.

5. IDENTIFYING CUSTOMERS WITH CHARACTERISTICS OF VULNERABILITIES:

• FCA expects and will look for evidence that firms have actively set up processes to identify their vulnerable customers, understand their needs, and train staff.

• FCA expects that firms have a process that encourages customers to discuss needs, so that a good outcome can be delivered across all channels.

6. PROPORTIONALITY:

• FCA expects the Duty to apply in a proportionate and reasonable way, where complicated products may need more attention than simpler or less risky products.

• More care is expected and harm mitigation if vulnerable customers are identified.

• Larger firms will have greater duty of care than smaller firms.

7. HOW THE DUTY APPLIES TO FIRMS THROUGHOUT THE DISTRIBUTION CHAIN:

• FCA expects that the Duty applies to all firms (manufacturer, distributors and adviser) that can influence customer outcomes, including those with no direct customer relationship.

• Duty will be proportionate on role and level of influence.

8. INFORMATION SHARING IN THE DISTRIBUTION CHAIN:

• FCA expects manufacturers and distributors to work together and share information, but manufacturers must take reasonable steps to ask and seek the information. 

• Firms are only responsible for their own activities, unless if a firm identifies consumer harm or non-compliance elsewhere in the chain.

• Distributors need to understand their target market and the way products operate and should receive this information from manufacturers.

9. APPLICATION TO NON-UK FIRMS:

• FCA expects firms conducting regulated activities in the UK (+Gibraltar) to be subject to the Duty.

• For offshore firms selling products to UK retail customer, the Duty still applies, given the UK distributors of non-UK products must take all reasonable steps to comply with the Duty (understand the product, target market, value it provides).

• Where a firm is not subject to the Duty in the distribution chain, then it is more likely to lead to a risk of poor customer outcomes. 

10. APPLICATION TO NON-UK CUSTOMERS:

• FCA expects that the firms should apply the Duty to non-UK customers in line with the existing regulatory perimeter.

• For offshore chain participants who are not subject to the Duty, FCA recognise that UK manufacturer may not be able to obtain the same level of compliance information.

11. CLARIFYING THE SCOPE:

• Firms approving or communicating financial promotions, need to consider the consumer principle, cross-cutting rules, and consumer understanding outcome.

• Firms in the temporary marketing permissions regime (TMPR), need to consider the Duty when communicating or approving UK financial promotions.

• The ‘closed product’ and ‘existing product’ definitions have been broadened to include ‘to market or offer a product for sale, for accounts held, or an ongoing relationship exist’ henceforth in scope for the Duty. 

12. DATA PROTECTION LAW AND CUSTOMER COMMUNICATIONS:

• FCA expects consumers to be given the information they need, at the right time, and presented in a way they can understand. The data protection laws (the UK GDPR and Data Protection Act 2018) and the Privacy and Electronic Communications Regulations 2003 (PECR) should not stop firms from telling customers about better outcomes.

• Administrative, regulatory, or customer service messages aren’t considered to be direct marketing, so there are no communications restrictions, considering they provide neutral, factual information. E.g., information about the product they hold, terms of other available products, and what their options are for moving to another product.

Source: FCA, Consumer Duty – information for firms. https://www.fca.org.uk/firms/consumer-duty-information-firms?_hsmi=349276408#revisions