Ten-years on from the PCBS Changing Banking for Good report, the UK has introduced a “Consumer Duty,” set to come into force next month. In a Good Counsel article herein, Michelle Kirschner and Matthew Nunan, attorneys with law firm Gibson Dunn, caution firms that seem as yet unprepared for the Consumer Duty’s new requirements. [See the Good Counsel Article The UK's Consumer Duty] Representing the “culmination of years of progressive measures and initiatives, building upon previous efforts to foster transparency, accountability, and fairness within the financial services sector,” the Duty “requires firms to act to deliver good outcomes for retail customers” and sets “overarching conduct standards that need to be adhered to” in the course of delivering these outcomes.
Seeking to discourage a ‘tick-box’ compliance mindset, the Duty is specifically outcomes-focused. “A passive reliance on processes that fail to generate good outcomes for consumers will not constitute compliance with the Consumer Duty,” Kirshner and Nunan warn. Moreover, the mere absence of customer complaints will not serve as a sufficient indicator of success — “firms must now also provide positive evidence of the quality of their consumer outcomes.” And the Duty is notable for the ex-ante approach to consumer interests it asserts. “Firms are now required to take proactive and dynamic measures in order to anticipate and address consumer harms as they arise.”
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