The UK Financial Conduct Authority (FCA) has identified areas where certain rules related to the new Consumer Duty require clarification.

The new Consumer Duty aims to fundamentally improve how firms serve consumers. It aims to set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.

The Duty is made up of new rules firms will have to follow. It will mean that consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.

In a consultation paper, the FCA offers clarification to the application of the Duty to firms approving or communicating financial promotions.

The FCA had earlier said that ‘Authorised firms approving financial promotions on behalf of unauthorised third parties would be subject to the Consumer Duty. They would need to consider, in particular, the Consumer Principle, cross-cutting rules and consumer understanding outcome’.

To deliver this, the FCA considers that the overall application provisions for the Duty require amendments, as they are currently unclear how they apply where a firm is only approving or communicating a financial promotion.

The FCA is proposing to amend the application provisions to make clear that the following parts of the Duty apply to firms in these circumstances:

• Principle 12
• the cross-cutting rules
• the consumer understanding outcome
• rules on monitoring and governance
• supporting provisions (such as those relating to reasonableness and redress)

If a firm is carrying out other business which falls within the FCA ‘retail market business’ Glossary definition and has a material influence in respect of other outcomes under the Duty, it will also be subject to other relevant parts of the Duty.