Sales Procedure Guide
Sales Procedure Guide
3.3 // Consumer Duty
Consumer Duty
In 2023, the FCA launched a new principle for businesses, Principle 12, a new Consumer Duty. This is the most significant change the FCA has ever introduced, and every firm needs to align with the new requirements. As a principles-based regulator focusing on consumer outcomes, the Consumer Duty has become a focus for all authorised firms.
Every firm is responsible for its part of the process. Evolution Funding wants to support introducers in that process and ensure you know what is expected and have everything in place to prove this to the regulator.
Every business should consider the Consumer Duty in every step of the customer journey, how your company and staff interact with consumers and what outcomes you deliver.
The Consumer Duty
- A firm must act to deliver good outcomes for retail clients
A firm must:
- Act in good faith towards retail customers
- Avoid foreseeable harm to retail customers
- Enable and support retail customers to pursue their financial objective.
Key elements of the firm-consumer relationship
- Products and services
- Price and value
- Consumer understanding
- Consumer support
Consumer Duty Resource Hub
Our Consumer Duty Resource Hub contains a host of information regarding our credit broking services and the services provided by our panel of lenders.
Also available are documents and guides to help support our partners through the regulatory change.
Our guidance documents provide helpful checklists, templates for the Price and Value Assessments, and details on documenting essential information such as your distribution strategy.
We work closely with a wide range of businesses across the industry, giving us access to information we will pass on to our introducers wherever possible.
If you require any additional compliance support for Consumer Duty, permissions, etc., we also work with several specialist compliance firms who may be able to offer you support*.
*Evolution Funding only provide the contact details for these businesses and is in no way responsible for any activity between the introducer and compliance firm.
A checklist for your business
Do you have the data to prove you are meeting the requirements of the Consumer Duty?
Changed customer outcomes
We believe that the FCA principle of Consumer Duty is not about treating everybody the same but about ensuring customers with similar asset risk profiles are treated in a consistent, fair and transparent manner.
We evidence Consumer Duty (where applicable) by ensuring the loan is both affordable and suitable, the cost of credit and any limitation of that credit agreement have been clearly explained to the customer, and that the basis of this loan offer is made free from conflict of interest.
Evolution has controls in place to enable us to evidence how we meet the FCA’s expectations of breaking the strong link between customer interest rate and broker earnings whilst ensuring we treat each customer fairly using the most appropriate outcome from our wide panel of funders.
This can be achieved using a combination of our process and procedures for underwriting, soft search capability using IQ, agreed dealer commission scales, and improved communications and recording of sales interactions with customers.
As part one describes, Evolution can offer our introducers flexible pricing models. We do this whilst enabling you to evidence good consumer outcomes consistent with the agreed contractual rates and terms you have in place for us.
Some of our introducers utilise our services on a first-string basis, but others also work with other lenders and brokers. We can provide data on the outcomes of consumers on our systems to control how your customers are quoted and proposed to us and ensure each one receives the correct contractual rates.
As part of our oversight process, we will ask you to confirm that you align with FCA CONC rules and do not put commission earnings ahead of the outcomes for your consumers.
Evolution has controls in place to enable us to evidence how we meet the FCA’s expectations of breaking the strong link between customer interest rate and broker earnings whilst ensuring we achieve the best outcome from our wide panel of funders. This can be achieved using a combination of our process and procedures for underwriting, soft search capability using IQ, agreed dealer commission scales, and improved communications and recording of sales interactions with customers.