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InsightConsumer Duty

Consumer Duty: what introducers need to keep on record

Introducers have responsibilities too. Here's what to explain to clients, what to record and how to show that a referral was appropriate.

By Charles Frank Finance · · 2 min read

What the Duty is

The Consumer Duty sets a higher standard of care for retail customers. The FCA introduced it through a new Principle for Businesses, Principle 12, which requires firms to act to deliver good outcomes for retail customers.[1][2]

It came into force on 31 July 2023 for products and services open to sale or renewal, and on 31 July 2024 for closed products and services.[2]

Alongside the Principle sit three cross-cutting rules: act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives.[2]

The four outcomes, from an introducer's seat

The FCA's guidance describes four outcomes. Each has a natural counterpart in how an introduction is made.[3]

  • Products and services: refer clients whose needs a secured loan could plausibly meet, and say so when it probably can't.
  • Price and value: be open about any fee you receive for the introduction, so the client can weigh it.
  • Consumer understanding: explain that the adviser, not you, will recommend whether a product is suitable, and that the loan would be secured on their home.
  • Consumer support: make it easy for the client to ask questions, change their mind or be put in touch with the right person.

What to keep on file

None of this needs a new system. What helps most is a short, consistent note for each referral: what the client asked for, what you told them, and why you thought an introduction to a specialist adviser was appropriate. That note answers most of the questions a network, lender or adviser is likely to ask later.

If your firm has vulnerable-customer or fair-value processes already, link the referral note to them rather than repeating them.[3]

Sources

  1. FCAConsumer Duty (firm guidance hub)

    Overview of the Duty and links to the FCA's rules and guidance.

  2. FCAPS22/9: A new Consumer Duty – Feedback to CP21/36 and final rules

    Principle 12, the cross-cutting rules, the four outcomes and the implementation dates.

  3. FCAFG22/5 Final non-Handbook Guidance for firms on the Consumer Duty

    The four outcomes and how firms in a distribution chain apply them.

This article is general information for intermediaries, not legal or compliance advice for your firm. Rules change: check the linked sources for the current position.