Consumer Duty

What does the FCA Consumer Duty mean to customers, AXA and our brokers

The Financial Conduct Authority (FCA) published the Consumer Duty final rules and guidance last July, a year before its full implementation date of July this year for existing products and services. AXA Commercial and Retail have been working towards the higher standards for some time and we want to share with our partners how we believe the Duty relates to our customers, AXA Commercial and Retail and the third parties we work with, which we hope you will find helpful.

What Is It?

The Duty is a higher standard of expectations for how firms should treat customers to better protect them from new and emerging drivers of harm and gives firms more certainty around the FCA’S expectations to support innovation, competition and to better serve customers. The work on the Consumer Duty publication predates the cost-of-living crisis but reinforces the need for the Duty’s higher standards. Across the Duty it requires firms to pay particular regard to vulnerable customers. The Duty comprises a new principle 12 that requires firms to act to deliver good outcomes for retail customers,

3 cross cutting rules:

  1. Act in good faith towards retail customers
  2. Avoid causing foreseeable harm to retail customers
  3. Enable and support retail customers to pursue their financial objectives

& 4 consumer outcomes:

  1. Product & Service
  2. Price & Value
  3. Consumer Understanding
  4. Consumer Support

Principle 12 outlines the expectations for positive and proactive actions for firm’s conduct, to place customer interests at the heart of activities and to consider customer outcomes. The cross-cutting rules set out the expected standards underpinning principle 12 and set out how firms should act, proactively and reactively, to deliver good customer outcomes. Firms must be able to evidence delivery of all elements of the Duty.

What’s the impact?

In the first of a series of planned Consumer Duty awareness pieces, we take a closer look at the impact to the customer, AXA Commercial and Retail and our brokers on the first two parts of the Duty, (Principle and cross cutting rules).

New FCA Regulation Customer Impact* AXA Commercial and Retail Impact* Broker Impact*

Principle 12:

Act to deliver good outcomes for retail customers

  • Customer-centric approach to all elements of the customer lifecycle, not just sales;
  • Firms are always striving for excellence which will strengthen competition, but equally may drive customer loyalty;
  • Being upfront and clear will give customers confidence in their decisions and reduce complaints;
  • Customers will buy products that meet their needs.
  • We have been reviewing our processes across the customer lifecycle. Where we have identified any shortfalls in customer experience, we are making changes and investing in training and solutions;
  • Acting for the customer is already at the heart of what we do;
  • We are reviewing how we monitor and evidence the delivery of good customer outcomes.
  • We are sure, like us, you have your own activities well underway;
  • We will be in touch if there is any additional information we need from you;
  • We are committed to collaborating with our brokers to deliver good outcomes for customers.

Cross-cutting rule:

Act in good faith towards retail customers

  • Customers will be able to act in their own interests and be able to choose the right products for them;
  • Customers will be able to make informed choices as firms will act fairly and honestly;
  • Behavioural biases will not be exploited, giving customers improved confidence. 
  • We have conduct training for all staff and are rolling out specific training; 
  • Our performance management, remuneration and incentive structures are fair and do not cause customer harm. We are also committed to regularly reviewing these and have controls in place to detect any non-compliance;
  • We do not design products or processes to exploit behavioural biases, information asymmetry or to frustrate/have unreasonable barriers;
  • We will do the right thing to remediate if an issue is identified. 
  • You will no doubt be reviewing your own processes similarly to us;
  • You will continue to collaborate with us to provide customers with insurance products that meet customer needs to deliver good customer outcomes;
  • We will continue to collaborate with you to monitor remuneration structures, but we do not anticipate any changes to existing commision levels as a result of the Duty, but we will let you know if this changes. 

Cross-cutting rule:

Avoid causing forseeable harm to retail customers

  • Customers will not have post-sale barriers to cancellation, switching provider, making a claim or complaint;
  • Customers will not be charged unreasonable fees or commission as fair value will be considered;
  • Customers with characteristics of vulnerability can expect firms to apply reasonable adjustments. 
  • We have mapped customer journeys and identified triggers for forseebale harm and have ongoing activity to address these;
  • Our ongoing product reviews will ensure clear target market statements and fair value;
  • We are reviewing our product documentation and customer communications through the lens of the customer;
  • Our MI and feedback loop capability is being expanded;
  • We will continue to collaborate with our partners to share information and avoid causing forseeable harm. 
  • Please continue to complete any information requests we may send to you as the information you provide will help us monitor and avoid causing customer harm;
  • If you identify any issues that impact customers and our distribution arrangement, then please let us know so we can solve together;
  • Consider your customer contact strategy and how you avoid causing forseeable harm. 

Cross-cutting rule:

Enables and support retail customers to pursue their financial objectives

  • Customers will be empowered to make informed decisions about the products they purchase and how to use the benefits of those products;
  • Where appropriate, customer will be signposted to other product providers or sources of help.
  • Our products are designed with a defined target market in mind which we are clear about, Commercial products can be found here and Personal products can be found here;
  • We are reviewing product documentation and customer communication through a conduct lens;
  • We have vulnerable customer training and vulnerable customer champions across the product lifecycle;
  • Our MI and feedback loop capability is being expanded.
  • If offering sales, ensure the advice is understandable for customers;
  • Support vulnerable customers as appropriate;
  • Continue to share information with us that will better serve customers to pursue their objectives.

**Examples are illustrative and not exhaustive

We will continue our broker support with outcome specific communications and who these apply to over the coming weeks. If you have any feedback or queries, the please do get in touch.

We believe Consumer Duty's customer-centric approach will be good for all our businesses and that if we work together, it will help us both be ready for Consumer Duty and beyond.

Consumer Duty - Update 04/23

The Financial Conduct Authority, (FCA), published its policy and final guidance for the new Consumer Duty regulation last July, a year ahead of its introduction...

Consumer Duty FAQs - AXA Commercial Insurance UK

Got a question about Consumer Duty for AXA Commercial Insurance? Find answers to some of our most commonly asked questions...

Consumer Duty FAQs - AXA Retail Insurance UK

Got a question about Consumer Duty for AXA Retail Insurance? Find answers to some of our most commonly asked questions...