Consumer Duty

What is Consumer Duty?

The Financial Conduct Authority (FCA) requires all authorised firms to comply with the standards of ‘Consumer Duty’. This represents what the regulator terms a “paradigm shift” in its expectations of firms. Consumer Duty introduces a ‘Consumer Principle’, which requires firms “to act to deliver good outcomes for retail customers”. In recognition of the barriers many consumers face to pursuing their financial objectives, the FCA wants to see firms deliver a higher standard of customer care and protection, and to go further to equip consumers to make effective decisions in their interests.
 

Consumer Duty is wide-ranging and requires all firms to review their services, communications and end-to-end customer journey, and to consider changes in areas including governance and accountability, MI and reporting, product design, pricing, distribution, servicing and staff training.
 
 

NorthStar’s Commitment to Consumer Duty

At NorthStar, we fully support the principles and implementation of Consumer Duty by the FCA. Consumer Duty forms the cornerstone of our business and we are committed to delivering the outcomes required by the regulator. Consumer Duty is embedded in every part of our business to ensure we meet the obligations we have under the duty. At NorthStar, we use the principles of Consumer Duty to continually ensure we are meeting or exceeding our obligations.
 
 

Components of Consumer Duty

Consumer Principle

The overarching principle of Consumer duty is that “Firms must act to deliver good outcomes for customers”. 
 

Cross-cutting Rules

All firms have three overarching requirements under Consumer Duty. These are to:

• Act in good faith towards customers
• Avoid foreseeable harm to customers
• Enable and support customers to pursue their financial objectives 
  

Four Outcomes

There are four core outcomes they FCA wish to see in relation to Consumer Duty. 
 

Outcome 1: Products & Services

All products and services for retail customers must be fit for purpose. NorthStar is a ‘Distributor’ under the FCA classification meaning firms that offer, sell, recommend, advise on, propose or provide a product or service would be regarded as distributors. For each product or service distributed, NorthStar is required to get information from the manufacturer to understand the product or service, its target market and its intended distribution strategy, regularly review the distribution arrangements to ensure they are appropriate and take appropriate action to mitigate the situation and prevent any further harm. 
 

Outcome 2: Price & Value

All consumers must get value for money. In order to assess if a product or service provides value, NorthStar considers the nature of all products and services (including the benefits that will be provided or may reasonably be expected and their qualities), any limitations that are part of the product or service (e.g. limitations on scope of cover for insurance products), and the expected total price customers will pay, including all applicable fees and charges.
 

Outcome 3: Consumer Understanding

Consumers must be given the information they need, at the right time, and presented in a way they can understand. All communications from NorthStar will be accurate, relevant and provided on a timely basis. They will be understood by the ‘average’ retail customer and be tailored to specific customer information needs and characteristics.
 

Outcome 4: Consumer Support

Consumers must be properly supported when using products and services. NorthStar always considers the support customers require to ensure that the services delivered meet their needs. NorthStar enables consumers to realise the benefits of the products and services they buy, pursue their financial objectives, and ensure they can act in their own interests. This also includes removing any processes with unreasonable barriers that do not act in the interest of the consumer. Finally, at NorthStar we monitor the services offered to ensure they remain fit for purpose and do not disadvantage any group, especially those with vulnerable characteristics.