Consumer Duty rules to extend to closed products by July 2024

The second phase of the Consumer Duty applies the rules to closed products and services, with a deadline of 31 July 2024, according to the Fairbanking Foundation¹. The charity, which published its report in October 2023, said the first phase required all new and on-sale products and services to comply by July 2023, and all closed products and services by July 2024¹.

The Duty was published in final form by the Financial Conduct Authority in July 2022 and requires financial services firms in the UK to deliver good outcomes for retail customers¹. It has three components: a consumer principle requiring firms to "act to deliver good outcomes for retail customers", cross-cutting rules, and four outcomes¹.

The charity said its research cast doubt on firms' willingness and ability to put consumers at the heart of implementation¹. It surveyed 1,168 consumers with a credit card, loan or overdraft open at the time, recruited between April and June 2023, and interviewed eleven practitioners from Tier 1 UK banks, neobanks, credit providers and consultancies¹. It found that none of the practitioners spoken to had explicitly surveyed consumers on how the firm should implement the change, and that compliance with FCA requirements was the strongest influence on what they did¹.

The report also said consumers should be able to see how their provider is doing on metrics they care about and compare with other providers, but that without a clear monitoring framework such comparisons would not be possible¹. It recommended that the FCA set clear rules for monitoring implementation, including consistent and comparable indicators¹.

Why it matters for households

The extension matters to anyone holding a financial product that is no longer sold to new customers, such as a legacy mortgage, savings account, credit card or insurance policy. From 31 July 2024, the Duty's rules apply to those closed products and services, not only to products still on sale¹. The rules were already in force for new and on-sale products from 31 July 2023¹.

The Duty's consumer principle requires firms to act to deliver good outcomes for retail customers, and firms must understand and evidence whether the four outcomes are being met¹. The Fairbanking Foundation's research, published in October 2023, questioned whether firms' responses were customer driven rather than compliance driven, and said it was not clear to the charity that the Duty would deliver higher and clearer standards of consumer protection¹.

The report also raised the question of how consumers will know whether firms are implementing the Duty effectively, noting that without a clear monitoring framework, comparisons between providers will not be possible¹. It recommended that the FCA expect firms to use consumer research and insight, and to engage more with consumer advocates, in monitoring the Duty and planning action¹.

What happens next

The deadline for closed products and services is 31 July 2024¹. The Fairbanking Foundation said action to improve implementation can continue as firms embed the Duty, particularly in ongoing monitoring of products and processes, where it wants to see firms using consumer feedback and research¹. It also said the second phase is an opportunity to make progress, as is the implementation of future financial regulations with expected outcomes for customers¹. No further FCA announcement on the closed products deadline has been reported.