"What it really is, it's about firms being able to demonstrate that they're taking active steps to avoid that harm at firm level. And some of the things that they will have to do to demonstrate good outcomes – such as reviewing the products and services, reviewing the price and value, ensuring customer understanding – will all go to supporting compliance with that rule."
But Craig Hamilton, group director for conduct and compliance at Phoenix Group, was less confident about the practical implications of that rule as people at the regulator, or the people in government, change.
"It's within our gift to define and, you know, control foreseeable harm; I agree with that, but we should just always recognise that those persuasions of those who set the policies and the rules may shift over time."
Layers of responsibility
The consumer duty is a culmination of lots of FCA initiatives, said Wallis, such as fair value assessments, product design, treating customers fairly.
It will bring about two layers of responsibility, ensuring providers have some responsibility even when they do not have a direct interaction with the customers.
For Wallis, collaboration will be key between providers, advisers and other stakeholders in the distribution chain.
"I don't think it's an optimal position if product providers are almost regulating what might constitute value through distribution and vice versa.
"There is ambiguity in the consumer duty because, as it stands, on the one hand the FCA is saying that these rules don't mean that those within the distribution chain have to oversee others within the distribution chain, and yet clearly through product governance rules and in other elements of the duty there is an obligation on providers and everybody else... to ensure that there is no issue when the sum of the parts is taken into account," he said.
This could create friction between the different elements in the distribution chain, he said.
Hamilton agreed that collaboration was going to be even more important. And he said it needed to be clear who is accountable for what, particularly as the Senior Managers and Certification Regime bestows individual responsibility onto senior managers too.
Details of the consumer duty were released this morning (July 27) and will be enforced in July 2023, three months after the original April date to give firms more time to prepare for the rules.
Find additional FTAdviser coverage of today's consumer duty announcements here:
Firms given extra three months to implement FCA's consumer duty
