Brokers

Consumer Duty

Important information for firms

The Consumer Duty sets the standard of care that firms should give to customers in retail financial markets. Coming in to effect from 31 July 2023, the Consumer Duty has set higher and clearer standards of consumer protection across financial services and requires firms to ‘act to deliver good outcomes for retail customers’.

At Covéa, we are strongly supportive of any initiative designed to improve outcomes for customers. It means that customers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the support and help they need, when they need it. Further information about our approach can be found in our Consumer Duty Statement and Implementation Plan Update.

How do firms act to deliver the Consumer Duty?

There are three cross-cutting rules set out around how firms should act to deliver good outcomes for customers. These are:

Acting in good faith

This is a standard of conduct characterised by honesty, fair and open dealing and consistency with the reasonable expectations of customers.

Avoid causing foreseeable harm

Firms must take proactive and reactive steps to avoid causing harm to customers through their conduct, products, or services where it is in a firm’s control to do so.

Enable and support customers to pursue their financial objectives

Firms must proactively and reactively focus on putting customers in a better position to make decisions in line with their needs and financial objectives.

What are the new Consumer Duty outcomes?

There are four outcomes which cover the key elements of the firm-customer relationship:

Products and services outcome

All products and services must be fit for purpose. That is, designed to meet the needs, characteristics and objectives of customers and targeted/distributed accordingly.

In response, our Product Review Process has been enhanced in line with ICOBS and PROD4 including fair value assessments and developing target market statements.

Price and value outcome

Value means more than just price. It involves firms assessing products and services to ensure that there is a reasonable relationship between the price paid and the benefit a customer receives.

In response, we have implemented a new Fair Pricing Policy. We have also issued communications to our brokers requesting further details around product commission and fees, ensuring collectively we can justify value in the distribution chain.

Consumer understanding outcome

Communications must give customers the necessary information to support and enable them to make informed decisions about financial products and services.

In order to meet communications requirements, we have drafted a series of Communication Principles for policy wordings and all customer communications.

Consumer support outcome

This outcome involves the design and delivery of support that meets the needs of customers, including those with characteristics of vulnerability. It ensures that customers can use their products as reasonably anticipated and that the customer journey allows for the mitigation of risk of harm, giving customers sufficient opportunity to understand and assess their options. The outcome also ensures that customers do not face unreasonable barriers during the lifecycle of a product or service. Firms are required to monitor the quality of the support they are offering and to act promptly if/when issues arise.

In assessing our products, the following range of factors are taken into consideration, including (but not limited to):

Understanding customer expectations of their product
Monitoring of product performance and competitiveness
Product suitability for the target market
Best practice in the relevant market
Reviewing each part of the distribution chain to make sure it provides value proportionate to the level of remuneration

Customers in vulnerable circumstances

To support our customers who find themselves in vulnerable circumstances, we have created a Vulnerable Customer Statement which outlines how we are supporting customers in a variety of vulnerable situations. We've taken a range of actions including:

Providing training to our people around identifying and supporting customers in a variety of vulnerable situations
Producing cost of living and vulnerable customer research to help identify and support the precise challenges being faced by our customers
Signposting for customers to charities and organisations that can offer support, including the use of SignLive for those with hearing impairments and DA Languages for those requiring translation services

Clear communications

In order to meet communications requirements, we have drafted a series of Covéa Communication Principles for Policy Wordings and all customer communications. These principles focus on supporting consumer understanding by:

Ensuring that our communications meet the information needs of the reader
Ensuring communications are clear, fair and not misleading
Tailoring communications to take account of the characteristics of the customer (including vulnerability)
Ensuring that information is accurate, relevant and provided on a timely basis
Checking and testing communications for customer understanding

To help tailor your communications to support those who are neurodivergent, we have produced a helpful guide here:

Neurodiversity Guide

Broker Updates

You can see all our latest Consumer Duty Updates to broker here:

Your feedback

We continue to work closely with our brokers to understand what further help and support is needed. If you have any feedback or queries around Consumer Duty then please email us.