Clifford Chance

How does the Consumer Duty apply to the UK insurance sector

12 September 2022

The Financial Conduct Authority ("FCA") recently published its policy statement and final rules and guidance setting out how it intends to implement its new Consumer Duty ("the Duty") in Policy Statement 22/9 and Final Guidance 22/5. The Duty is described as the 'cornerstone' in the FCA's strategy of setting higher standards of consumer protection in retail financial markets. The Duty marks a return to a more outcome-focused approach by the regulator and will place the onus on firms to proactively assess and evidence the extent to how they deliver good consumer outcomes.

The framework of the Duty, which was described in Consultation Paper CP21/36, published in December 2021 and which followed Consultation Paper CP21/13, published in June 2021, continues to comprise the Consumer Principle, cross-cutting rules, and four outcomes. There are now significant clarifications regarding how the Duty relates to "retail consumers," as well as new guidelines for the insurance industry that cover how the Duty applies to the distribution chain. The implementation timeline is also confirmed with a deadline of 31 July 2023 for all in-scope new and existing products and services that are open to sale or renewal and 31 July 2024 for closed products and services.

The final rules and guidance are discussed in this briefing together with the implications for the UK insurance industry, including insurers and distributors. For an in-depth analysis of the final Duty requirements and commentary on the duplication of Duty against existing FCA requirements, please refer to our briefing: Consumer Duty: FCA issues final rules and guidance – September 2022. 

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