How does Consumer Duty go beyond regulatory change to benefit members?

May 2023

Consumer duty goes beyond regulatory change and will go a long way in enhancing member outcomes.

Consumer Duty is a new and higher standard of consumer protection that has been introduced by the Financial Conduct Authority (FCA).¹ It will be one of the most significant regulatory changes to influence the pensions industry in this decade. It aims to ensure that the finance industry as a whole, has a clearer focus on customer outcomes and protecting customers from harm.

The new regulation comes into effect in July 2023 for products available on or after this date, or in July 2024 for closed products that customers still hold but are no longer made available for sale or renewal.¹

Through Consumer Duty, the FCA are setting out that we must give the interests of our members the same weight that we give our commercial activities.[1] Although many in the industry may feel they’re already acting this way, the Duty carries a greater responsibility in terms of how firms evidence their increased focus on consumer outcomes. Consumer Duty goes beyond a tick-box exercise – we will be measured against the outcomes we deliver for our members. All products and services need to be fit for purpose and designed to meet the needs of consumers.¹  

Under the Consumer Duty, it’s imperative to evidence the good outcomes that organisations claim to deliver for customers. This is because the FCA want all consumers to receive fair value, with value referring to the overall benefit a consumer receives from a product, not just the price paid for it. And when it comes to communication, consumers must be able to make informed decisions by having the information they need, at the right time, presented in a way they can understand.

Ongoing support that meets consumers’ needs over time is also key for consumers to realise the benefits of the products and services they have.¹

Scottish Widows support

While the Consumer Duty will bring change, it will also bring opportunity for organisations to improve to benefit customers. At Scottish Widows, we support Consumer Duty and the increased momentum it’s given us to continue our work to deliver great outcomes for members.

We start from a position of strength, with focus being placed on areas we can improve in the spirit of Consumer Duty. For example, we are reviewing how we communicate during key moments of truth like the at-retirement stage. We’re also improving our onboarding experience for members by starting to review and roll out changes to our welcome packs.

The pensions industry is well acquainted with the principle of fair value for members, but Consumer Duty increases that focus even more across the distribution chain. In accordance with this, we have opened up access to summarise fair value assessments for each of our in-scope products. These can be found on our new product governance page.

There is also significant attention attached to member understanding and the support we offer. We already offer members tailored experiences based on their needs. Where we look to go further is increasing colleague access to sophisticated insight in a way which will help us to gain new perspectives on member understanding and behaviour. Additionally, we have further invested in training to equip our colleagues to fully embrace the aims of Consumer Duty.

Our customer-centric mindset across the business means we are committed to meeting our members’ needs. We’ll ensure a specific Consumer Duty lens is applied to this mindset, and that the application of Consumer Duty principles is embedded across the business to ensure we meet Consumer Duty outcomes for members.

Consumer Duty goes beyond regulatory change and substantially drives better outcomes for consumers, and we welcome the positive impact it will bring for retirement savers across the UK.

Notes to Editor

[1] According to FCA, 2022/2023 Consumer Duty.