FCA's Consumer Duty priorities for the rest of 2024/25

On 9 December, the FCA published their key Consumer Duty priority areas for 2024/25. These priorities aim to enhance consumer outcomes, simplify regulations, and encourage a more competitive and innovative financial services sector.

Here’s a summary of the FCA’s key areas of focus until the end of next year.

Key focus areas

1. Embedding the Consumer Duty and raising standards

The FCA is actively assessing how firms are implementing the Duty to ensure consistent improvements in consumer outcomes. This involves:

• Board reports and complaints analysis: reviewing firms’ governance documents and complaints data to identify systemic issues and drive better practices.
• Vulnerable customer treatment: evaluating how firms support consumers in vulnerable situations, ensuring fairness and accessibility.
• Consumer support and decision-making: monitoring how firms assist consumers throughout their journeys, with a focus on clear communication and informed choices.

The FCA plans to share good practices and address areas needing improvement through publications in late 2024 and early 2025. Firms of varying sizes will receive tailored guidance to ensure proportionate implementation.

2. Enhancing understanding of price and value outcome

Fair value remains a core principle of the Consumer Duty. The FCA seeks robust assurance from firms that their pricing is justifiable and beneficial to consumers. Key initiatives include:

• Platform cash treatment: investigating how investment platforms manage interest on customer cash balances.
• Market studies:
• Pure protection insurance: Analysing consumer engagement and market competitiveness (starting H1 2025).
• Unit-linked pensions: reviewing transparency and value in long-term savings (findings expected in Summer 2025).
• Premium finance: examining the fairness of financing arrangements for motor and home insurance (interim report due H1 2025).

These efforts aim to address pricing ambiguities and ensure that consumers receive genuine value for their investments.

3. Sector-specific priorities

The FCA is addressing challenges across various sectors, with a focus on vulnerable consumers and digital engagement. Key initiatives include:

• Retail banking: ongoing work on cash savings and customer accessibility. A specific review on bereavement and power of attorney is set for publication in H1 2025.
• Consumer finance: assessing whether digital tools help consumers fully understand credit agreements, with findings expected in H1 2025.
• Payments and digital assets: exploring clarity in foreign exchange pricing and transparency in payment services (a 2025 focus).
• Consumer investments:
• Enhancing support for pension savers through consultations on advice frameworks and regulatory rules (H1 2025).
• Improving identification of vulnerable clients by wealth managers.
• Revising the PRIIPs regulation to better align with UK market dynamics (consultation in late 2024).
• Insurance: continuing work on claims handling, focusing on governance and consumer outcomes, with findings scheduled for Q2 2025.
• Sustainable Finance: finalising rules to expand the Sustainability Disclosure Requirements (SDR) to portfolio management (Q2 2025).

4. Realising the benefits of Consumer Duty

The FCA also published a recent Call for Input covering their wider requirements on retail firms, inviting feedback as to where they can use the Duty to simplify them. The next steps are due to be announced in H1 2025.

Looking ahead

The FCA’s Consumer Duty roadmap demonstrates its commitment to prioritising consumer well-being while encouraging innovation and competition. By addressing systemic challenges and setting clear expectations, the FCA aims to build a more transparent, fair, and dynamic market that benefits all stakeholders.

As firms continue embedding Consumer Duty, they are encouraged to align their practices with FCA guidance, focusing on proportionality and responsiveness to emerging risks.

For more details, read the FCA’s full update here. To learn how Smart Money People can help you meet your FCA reporting requirements, visit our dedicated Consumer Duty page.