CP21/36: A new Consumer Duty: feedback to CP21/13 and further consultation

Consultation opens
Consultation closed

We are consulting for a second time on our proposals to set a higher standard of consumer protection in retail financial markets, where firms compete vigorously in the interests of consumers.

Read the full consultation CP21/36 (PDF)

Why we are consulting

We want to see a higher level of consumer protection in retail financial markets, where firms compete vigorously in the interests of consumers. We also want to drive a healthy and successful financial services system in which firms can thrive and consumers can make informed choices about financial products and services.  

We see a range of good practice by firms in retail sectors with firms innovating to meet consumer needs. But we also see that firms are not consistently and sufficiently prioritising good consumer outcomes. This causes consumer harm and erodes consumer trust. 

We set out our high-level proposals in our first consultation; we’ve now revised those in light of your feedback and are setting out our proposals in more detail.  

This consultation is likely to interest:   

  • regulated firms, including electronic money institutions, payment institutions and registered account information service providers  
  • consumer groups and individual consumers   
  • industry groups/ trade bodies   
  • policy makers and regulatory bodies   
  • industry experts and commentators , and  
  • academics and think tanks  

Our infographic summarises how the Consumer Duty will raise the standard of consumer protection. 

Background to the new consumer duty  

The new Consumer Duty aims to bring about a fairer, more consumer-focused and level playing field in which: 

  • firms are consistently placing consumers’ interests at the centre of their businesses and extending their focus beyond ensuring narrow compliance with specific rules, to focus on delivering good outcomes for consumers  
  • competition is effective in driving market-wide benefits, with firms competing to attract and retain customers based on high standards and innovate in pursuit of good consumer outcomes, and  
  • consumers get products and services which are fit for purpose, provide fair value, that they understand how to use and are supported in doing so  

Our first consultation CP21/13: A new consumer duty outlined our high-level proposals to deliver this. It included: 

  • a new Consumer Principle that provides an overarching standard of conduct  
  • a set of crosscutting rules, and  
  • outcomes that support the Consumer Principle by setting expectations for firms’ cultures and behaviours  

In this second consultation, we set out more of the detail, including: 

  • key feedback to CP21/13 and our analysis of the responses received 
  • our revised proposals for a new Consumer Duty, which include proposed draft Handbook rules and guidance, and 
  • cost benefit analysis 

We are also consulting on non-Handbook guidance to help firms comply with the proposed obligations under the new Consumer Duty (in Appendix 2 of the CP). 

Next steps

This consultation has now closed. We will publish feedback on responses and issue a Policy Statement once we have reviewed your comments.

We expect to publish the policy statement summarising responses and making any new rules by 31 July 2022