Consumer Duty Update
Consumer Duty – Pen Underwriting update
The introduction of the new Consumer Duty represents a significant and wide reaching regulatory reform aiming to improve outcomes for customers and is strongly supported by Pen. This communication is intended to provide you with some high level guidance on what Consumer Duty is, as well as making you aware of some of the activity that Pen has undertaken in order to meet each of the duties specified outcomes.
What is Consumer Duty?
Consumer Duty is a package of measures introduced by the Financial Conduct Authority (FCA) which set higher expectations on the standard of care firms provide to customers. It comprises of three key elements:
• A new Consumer Principle (Principle 12) which requires firms to ‘act to deliver good outcomes for retail customers’.
• Cross-cutting rules to develop the standards of conduct expected under Principle 12.
- Firms must act in good faith.
- Firms must avoid foreseeable harm.
- Firms must enable and support customers to pursue their financial objectives.
• Rules and guidance relating to four outcomes that the FCA want to see under Consumer Duty to support the delivery of good customer outcomes:
1. Products and Services—Customers receive products and services which meet their needs, characteristics and objectives.
2. Price and Value—The price paid by customers is reasonable compared to the overall benefits products or services provide.
3. Consumer Understanding—Firms communicate in a way that meets the information needs of customers, equipping them to make timely and properly informed decisions.
4. Consumer Support—Firms provide appropriate standards of support to assist customers, including those with characteristics of vulnerability.
Who does Consumer Duty apply to?
The Consumer Duty is cross-sector and applies to all FCA regulated companies providing products or services to retail customers.
When did the Consumer Duty requirements come in to effect?
There were three key Consumer Duty deadlines applicable to open products and services:
What is Pen doing to meet Consumer Duty requirements?
Pen strongly supports any initiative designed to improve outcomes for customers, the obligations and requirements set by Consumer Duty align to our overarching strategy of delivering a customer focused service that looks after the best interests of customers.
Following analysis activity in October 2022, Pen created an implementation plan which was designed to ensure that Consumer Duty requirements were achieved by regulatory deadlines. Pen had a project team in place which oversaw the implementation plan ensuring that every aspect of Consumer Duty is embedded in our in-scope business.
Pen met the product and services, and price and values outcomes by September 2022 and met the rest of the duties requirements by 31 July 2023, a summary of activities include (but are not limited to) the following:
• Enhancements to our product governance and oversight approach to ensure that the products and services we distribute and manufacture meet customers’ needs and offer fair value.
• Completing value assessments of Pen manufactured products in order to comply with outcomes 1 and 2—output from this activity can be found here.
• Obtaining and observing fair value assessment and target market statement output from insurers where Pen is not the manufacturer.
• Undertaking claims journey assessments to validate the extent to which our approach and service meets the information and support needs of customers.
• The enhancement of the governance forum in place to provide oversight of Risk and Customer impact.
• Continuing Broker/Customer survey activity and undertaking Broker forums to gain feedback on customer understanding to enable us to inform continuous refinement of our approach.
• Enhancement to MI reporting to further develop the oversight of customer outcome performance indicators.
• Communication review activity and put in place best practice wording guidance to enhance customer documentation and service offerings.
• Updated internal policies, procedures and controls.
• Extensive training and communication to ensure that our team fully understand the requirements of the Consumer Duty and are able to act to deliver good customer outcomes.
• Customer support enhancements including greater focus at the Pen Customer Champion forum.
Next steps
We hope you find this update useful. Please note that the information in this document is provided by Pen as general guidance only—it is not intended to provide any legal or regulatory advice. If you are undertaking regulated activity, it remains your responsibility to take appropriate steps to ensure you have assessed the requirements of the Consumer Duty against your own business model and that an appropriate plan is in place.
Should you have any questions or queries about our approach to Consumer Duty, please contact our Risk and Governance team at Pen.Conduct.Helpdesk@penunderwriting.com
