In its latest newsletter, the Personal Investment Management & Financial Advice Association (PIMFA) has published a useful round-up of the recent FCA document on its Consumer Duty focus for 2025.
The trade body says:
The Financial Conduct Authority (FCA) has published their priorities under the Consumer Duty for the remainder of 2024/25, the areas of focus are:
Embedding Consumer Duty and raising standards
The FCA note the expectation of proportionality in firm approach to embedding Consumer Duty and further note that, where appropriate, the regulator will set out different approaches smaller firms could take and will share insights to make it easier for firms to understand what good and poor practice looks like.
The FCA have 3 cross-cutting projects (grouped into packages of publications in Q4 2024 and Q1 2025):
• Review of board/governing body reports and complaints & root cause analysis
• Review of treatment of customers in vulnerable circumstances
• Review of consumer support outcome and supporting informed decision-making
Enhancing understanding of the price and value outcome
In acknowledgement of firm challenges in conducting fair value assessments, the FCA advise they want firms to use robust analysis to demonstrate that they are offering fair value, and identify and take action where they are not. Firms are also signposted to previously published feedback on fair value assessments.
Further priorities include:
• Platform cash – treatment of interest of cash balances
• Market study into pure protection insurance – FCA will commence this market study in H1 2025.
• Unit-linked pensions and long-term savings – FCA expect to complete work in Summer 2025 and publish findings.
• Market study into premium finance – FCA plan to publish an interim report in H1 2025.
Sector specific priorities
Consumer Investments
In addition to the platform cash price and value work, other areas of focus are:
• Advice Guidance Boundary Review – Exploring how the Consumer Duty could help to close the advice gap so that firms enable and support consumers to pursue their financial objectives and make key financial decisions. In Q4 2024, FCA will publish a consultation on targeted support. In H1 2025, FCA plan to consult on rules for better support for consumers in retail investments and pensions.
• Tackling poor identification of clients with characteristics of vulnerability by wealth managers – In H1 2025 FCA will provide specific firm feedback and take appropriate regulatory action if necessary.
• The Packaged Retail and Insurance-Based Investment Products (PRIIPs) Regulation/ Consumer Composite Investments (CCIs) Regulation – Repealing and replacing the retained EU PRIIPs regulation with a new UK retail disclosure regime that works effectively for the UK’s dynamic capital markets and fosters informed retail investor participation. FCA will consult on draft rules in Q4 2024.
Realising the benefits of Consumer Duty
The regulator noted the ongoing review of wider rules to ascertain how Consumer Duty can be used to simplify requirements and reduce the complexity of the rulebook.
Call for Input on simplifying rules – next steps in H1 2025.
