FCA outlines priorities for Consumer Duty in 2024/25

The Financial Conduct Authority (FCA) has set out its priorities for the remainder of the 2024/25 financial year under the Consumer Duty, marking a significant shift in its regulatory approach. The initiative, fully implemented in July 2024, aims to ensure firms deliver good outcomes for retail customers through improved standards, fairness, and transparency.

The FCA is integrating the Consumer Duty with its secondary objective of fostering international competitiveness and economic growth. The regulator plans to review and simplify its rulebook to lower compliance costs, encourage innovation, and support a risk appetite conducive to growth.

Four focus areas for 2024/25

1. Embedding the Consumer Duty and raising standards
The FCA is scrutinising firms’ compliance through projects targeting:

• Board and complaints reviews to assess systemic issues and encourage best practices.
• Treatment of vulnerable customers to ensure fair practices.
• Consumer support and decision-making to enhance transparency across customer journeys.

Findings will be published in Q4 2024 and Q1 2025, with guidance for smaller firms to adopt proportionate approaches.

2. Enhancing price and value outcomes
Addressing challenges in fair value assessments, the FCA will tackle specific areas such as:

• Interest treatment on platform cash balances to ensure equitable practices.
• Transparency in unit-linked pensions and long-term savings with findings expected in summer 2025.
• Market studies into premium finance and pure protection insurance to uncover systemic pricing and competition issues.

3. Sector-specific initiatives
The FCA is targeting several high-priority sectors:

• Retail banking: Improving services for vulnerable customers, particularly in bereavement and power of attorney situations.
• Consumer finance: Evaluating digital tools’ effectiveness in credit agreement comprehension.
• Consumer investments: Proposing reforms to close the advice gap and improve outcomes for pension savers and retail investors.
• Insurance: Investigating claims handling arrangements and value in general and life insurance.

4. Maximising the benefits of the Consumer Duty
The FCA has invited feedback on simplifying existing retail requirements under the Consumer Duty framework. Following an October 2024 deadline for submissions, it plans to announce next steps in H1 2025.

Future directions

Upcoming work includes enhancing sustainability disclosures for investment products, with new rules anticipated in mid-2025. The FCA also aims to clarify expectations for payment services and digital assets, focusing on transparency in foreign exchange pricing.

Asset Finance Connect is interested to hear your views on the FCA’s Consumer Duty focus areas for 2024/25. Please email Lisa Laverick with your comments.