Consumer Duty: Selling the right things, in the right way, to the right people

29.03.23 10:41 AM

The FCA’s central aim for its new Consumer Duty rules around products and services is to reduce potential consumer harm by ensuring client needs are always at the heart of a firm’s products and services.

The changes build on the current product governance rules under PROD and are relatively straightforward. The main difference from PROD is the need for a consistent, documented approach from firms in evidencing how these requirements are met. For many advisers this should not represent a fundamental change from what they are doing currently. The key takeaway for advisers is to not over complicate things – it’s simply selling the right things, to the right people, in the right way.

As part of our Consumer Duty webinar series, Tenet’s Client Services Manager, Nick Watson shared his insights on the new product and services rules.

Speaking on how firms have approached product governance to date, Nick labelled it a “mixed bag”. He believes a lot of firms are yet to document their target markets, which is an important part of the Duty, as target market analysis can reduce potential consumer harm. Firms are also struggling with putting in place outcome monitoring, which should be done on an ongoing and consistent basis to ensure product or service effectiveness.


However, where firms have attempted to make progress, it’s mostly been done well. Product governance tends to be done best when firms have used the wealth of materials available or employed compliance consultancies to assist. Ensuring the changes are built into firms’ governance process as an integral part of systems and controls should be best practise.

On the topic of management information (MI) requirements, the FCA’s general steer is that firms should be proportionate when putting it in place. It’s not necessary to spend large sums, firms just need to consider what MI is available to them and demonstrate they’re making good use of it. All firms will have data on what they sell and to who, and the FCA guidance provides good examples of the types of data firms can use. Despite this, Nick believes many firms still have a gap in MI requirements to some degree – reflecting the FCA’s intention to raise the bar through the Duty.


Greater sharing of information is an intrinsic part of Consumer Duty and should be expected going forwards. Advisers can be reactive: they’re not obliged to share information with manufacturers but should respond if asked, and questions are likely to be more detailed. There is, however, an element of proactivity in sharing information if advisers identify an issue, especially if the issue relates to consumer harm.

Nick says he’s experienced some resistance from firms over the new product and service rules but reminds them the FCA has shifted onus onto firms proving they deliver good outcomes. He added that the Duty presents a great opportunity for firms to review, assess, and improve, believing it “simply good business practise”.

Some firms think the new consumer duty rules are the same as the Treating Customers Fairly regulations from 2007, without realising there’s a lot of areas where the FCA have moved the dial. The Duty involves additional evidencing and documenting, with firms risking tricky interactions with the FCA if they do not give the changes attention.

It is therefore paramount that advisers make all necessary changes required of them, and while these many be simple, they will take time to understand and adapt to.

Tenet Compliance Services provides a Products and Services Outcome Assessment that can be applied across PROD and Consumer Duty requirements. It includes prompts and extensive guidance to help firms through the process. This assessment is in addition to a whole wealth of support material aimed to support Consumer Duty implementation, and which can be found on our Consumer Duty Hub.

Ellen Hamilton