Implementing Consumer Duty


As you know, Consumer Duty represents a significant shift in the FCA’s expectations of firms and introduces a customer-outcome focused approach.

We’re writing to provide an update on our plans and open the dialogue to work with you to ensure a smooth roll-out of the Duty.

A key requirement is for a manufacturer to undertake product reviews and provide its assessment to introducers by the end of April 2023.  We’re in the final stages of completing this but wanted to take the time to give you a heads-up on our plans.

We’ve defined our products as

  • Hire Purchase (HP)
  • Personal Contract Purchase (PCP)
  • Lease Purchase

Our product assessment will include:

  • Details of the product and its rules
  • Key features of the product
  • Target market of the product
  • End-to-end fair value assessment including any commissions
  • How we envisage working together

We’ve concluded as a result of our product reviews that we’re the sole manufacturer of the products distributed through the large majority of our dealers and brokers. We’ll be writing to you separately if, exceptionally, we consider that you may be a co-manufacturer of any of those products.

Our next steps:

  • Provide you with the product assessments, ahead of the end of April Consumer Duty deadline
  • Support you with the roll-out of the Duty
  • Maintain an open dialogue with you

Your key responsibilities, as we see them, in the distribution chain are as follows:

– Review our product assessments when you receive them and consider whether they enable you to:

  • understand our distribution strategy and target market for the products;
  • consider the needs, characteristics and objectives of potentially vulnerable customers within the intended target market;
  • understand the value the products are intended to provide to customers;
  • assess whether your own distribution arrangements (including any remuneration you receive or pay and your distribution of any other product – for example, insurance – alongside our products) are consistent with our distribution strategy and the fair value of the products as we’ve assessed it.

If, on review of the assessments, you consider that you need further or clearer information in any respect, you should contact us urgently to discuss what we can do to help to ensure we meet our respective Duty obligations by the 31st July Consumer Duty implementation deadline.

If you consider that the product assessments give you what you need to distribute our products in compliance with the Duty, you should ensure that your procedures, systems and controls align in order to deliver compliance.

– Ensure your staff understand and are suitably trained on our products as described in the product assessments.

– Review any product information materials you use (including any on-line product descriptions or videos) to ensure that they:

  • are consistent with the information in our product assessments;
  • accurately and clearly describe our products; and
  • will enable customers to make informed and appropriate choices.

– Ensure your vulnerable customer controls meet the Duty’s requirements.

– Ensure you have suitable support from your business to meet the obligations.

– Where you distribute our products to other distributors in the distribution chain (for example, where you’re a broker which distributes our products to your underlying dealers):

  • ensure all information about our products is passed to those distributors; and
  • consider whether such onward distribution means that you’re a co-manufacturer of our products and therefore responsible for conducting your own product reviews and fair value assessment. Please contact us urgently if you consider that you may be a co-manufacturer of our products on this basis.

Finally, we’re here to support you through the major change the Duty will bring about, so do please contact us if you have any questions or concerns.  We welcome feedback from all our introducers to help ensure our products provide good customer outcomes and look forward to working with you in this new regulatory environment.

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