The Consumer Duty and Aviva

Why has the FCA introduced the Consumer Duty?

Hi. I’m Alistair McQueen at Aviva.

In this short video I will look at why the FCA has decided now is the time for the Consumer Duty.

The Consumer Duty is significant. It arguably represents the biggest single page turn in our industry’s regulatory rulebook since “treating customers fairly” was first introduced more than a decade ago.

The FCA is not driving change just for fun. It is driving change to drive better outcomes for those we serve.

The FCA observes that individual responsibility for financial wellbeing in the UK is greater than ever. But it also observes a public that continues to carry low trust in financial services. This is a bad mix.

To its credit, the FCA also observes that it too has a need to move with greater pace and proactivity.

To paraphrase, for the FCA to keep doing the same thing, but hope for better outcomes could be a definition of insanity. The FCA is choosing not to keep doing the same thing.

At Aviva, we welcome this ambition for change.

The final definition of the Consumer Duty was born on 27 July 2022. On this day, after many months of industry consultation, the final 280 pages of detailed comment and guidance was published by the FCA.

I won’t attempt to cover all 280 pages here, but let me highlight three key points.

First, in terms of regulatory priority, the FCA are challenging all of us to give our customers’ interests the same priority that we give our commercial ambitions. In short, service and sales must be on an equal footing, on the shop floor and in the board room.

Second, in terms of regulatory approach, the FCA are not seeking to judge us against our ability to tick a long list of regulatory boxes. Instead, they are seeking to judge us against the outcomes we deliver for our customers. Outcomes, not actions, are what really matter to our customers. And it’s these outcomes that will really matter to the FCA.

And third, in terms of regulatory attitude, I’d argue that the FCA – acting as our regulatory judge – will shift its approach from treating us as “innocent until proven guilty”, towards a position of judging us as “guilty until proven innocent”. Under the Consumer Duty it will no longer be good enough to claim that we are acting to deliver good outcomes. We must evidence that we are acting to deliver good outcomes. 

In summary, the Consumer Duty significantly shifts the balance, style and attitude of our industry regulation. And it is believed that this shift will drive better outcomes for consumers.