Consumer Duty implementation deadline for firms

The Financial Ombudsman Service has said its work on the Consumer Duty will not end when the rules take effect. The Duty applies to acts or omissions from 31 July at the earliest, and the ombudsman service says it does not expect significant numbers of complaints involving the Duty until later in the year¹.

The ombudsman service published its position on 28 June 2023, setting out how it expects to handle complaints that involve the new rules. Its chief executive and chief ombudsman, Abby Thomas, spoke at the Consumer Duty Implementation Summit, organised by City & Financial Global, on 20 June 2023¹.

The ombudsman service said the Duty is underpinned by concepts of fairness and reasonableness similar to the standard it already judges complaints against, and that it does not expect the Duty to significantly change how it looks at many complaints or to have a significant impact on complaint volumes¹. It said its duty is to resolve complaints based on what it thinks is fair and reasonable in all the circumstances of the case¹.

The Duty is not retrospective. The ombudsman service said it looks at the rules, standards, codes and good practice in place at the time of the event, and that the Duty only applies to acts or omissions from 31 July at the earliest¹. Its consumer guidance sets out when the Duty may apply to a complaint²:

Source: Financial Ombudsman Service²

The Financial Conduct Authority introduced the Consumer Duty on 31 July 2023, describing it as a new standard for consumer protection². It requires firms to act to deliver good outcomes for customers, and sets three cross-cutting rules: act in good faith, avoid causing foreseeable harm, and enable and support retail customers to pursue their financial objectives². It also sets four outcomes covering products and services, price and value, consumer understanding, and consumer support².

The ombudsman service said it may see more complaints about the use of products and services after the Duty takes effect, rather than only about their sale and cancellation, and more complaints about price and value, including where products appear not to represent good value or where pricing seems arbitrary¹. It said it may ask businesses to provide fair value assessments and explain why an overall proposition is fair¹.

The ombudsman service said the Duty cannot and will not protect consumers from all harm, and that some consumers will be harmed by circumstances that were not reasonably foreseeable¹. It said it expects complaints to fall over time as outcomes and consumer experiences improve¹.

Why it matters for households

The Duty changes the standard firms must meet when dealing with customers, and it applies to acts or omissions from 31 July at the earliest¹. For anyone complaining about something that happened before 31 July 2023, the Duty does not apply to that incident². For incidents between 31 July 2023 and 31 July 2024, it may apply if the product or service was available to buy or renew on or after 31 July 2023². From 31 July 2024, it may apply to cases regardless².

Where the Duty is relevant, the ombudsman service said it will take it into account alongside other rules and regulations when investigating a complaint, and will consider the law, regulator's rules, guidance and standards, and industry codes in place at the time of the event². The ombudsman service said it does not expect the Duty to have a significant impact on complaint volumes¹.

What happens next

The ombudsman service said it will continue to set out and share detail about its approach after the Duty is introduced, working with the FCA to ensure consistency, and will share insight with financial businesses¹. It said it will listen to what businesses tell it about cases involving the Duty and give examples and case studies, and that it aims to share case studies and develop workshops as the year goes on¹. It has created sector-specific directorates covering areas such as investments, insurance and banking, and said these will share insight and learnings with each other after the Duty's introduction¹.

The ombudsman service said it does not expect to receive significant numbers of complaints involving the Consumer Duty until later in the year¹.