Consumer Duty

The Consumer Duty represents an important change to how Arch and other financial services firms will be regulated. Arch is committed to ensuring our customers receive good outcomes and we expect our partners to ensure that they act in line with their regulatory requirements.

What is the Consumer Duty?

The Financial Conduct Authority (FCA) set out the final rules and guidance for a new Consumer Duty in July 2022. The Consumer Duty will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.

The Consumer Duty goes further than the existing Treating Customers Fairly (TCF) requirements and requires firms to “act to deliver good customer outcomes.” This means considering and prioritising customer interests at every stage of the product lifecycle and customer journey. Firms need to be able to monitor and evidence that customers are consistently receiving good outcomes. 

The four outcomes are:

  • Products and services.
  • Price and value.
  • Consumer understanding.
  • Consumer support.

The Duty applies across the distribution chain. It applies wherever a firm has material influence over a retail customer outcome; for example, manufacturing the insurance products, distributing, and delegating certain activities, such as underwriting, claims or complaints handling.

The Consumer Duty rules come into force on 31 July for all open products and services. For any product or service which is closed to new customers, we have until 31 July 2024 to apply the new rules.

What’s the scope of the Consumer Duty rules?

The rules apply to all retail customers. The FCA’s definition includes individual customers and small and medium sized commercial customers, except for reinsurance and contracts of large risks*.

The duty applies to all parties in our distribution chain** that have material influence over one or more of the four customer outcomes (outlined above).

What is Arch doing to implement the new Consumer Duty rules?

We, at Arch, are dedicated to putting customers at the heart of everything we do, and the Consumer Duty is aligned with our culture and our strategy.

Arch has a dedicated programme team who are running the implementation of the Consumer Duty.  The below provides a high-level overview of the requirements and briefly sets out how Arch is working to ensure compliance and/or to enhance our existing frameworks.

The FCA have set clear expectations that we monitor, understand, and evidence the outcomes that customers are receiving. 

For our partners:

Our brokers, coverholders and third parties play an important role and we are contacting our brokers, coverholders and third parties to discuss any additional requirements and information we may need. This is ongoing so you may still be contacted even if you have not been contacted to date.

If you have any questions which have not been covered below, please contact us at: [email protected]

Products and service outcome and price and value outcome:

The FCA expects products and services to be fit for purpose, to be designed to meet the needs, characteristics and objectives of a target group of customers and distributed appropriately. The FCA also expects customers to receive fair value, which is more than just price, and more a balance between the price paid for a product or service and the overall benefit a customer receives from it.

What is Arch doing to comply with these outcomes?

We have a robust Product Oversight and Governance process which reviews whether our products and services are fit for purpose, designed to meet the needs and characteristics of the intended target market, offer fair value and are distributed appropriately.  

We continuously consider through ongoing monitoring whether our products and services have features that could cause harm for any group of customers, including those with characteristics of vulnerability.  

We have already completed product reviews and fair value assessments across our entire in-scope product suite, and we will continue to carry out our product and fair value assessments on at least an annual basis to evidence that our products continue to be fit for purpose.

For our partners, this page contains Distributor Summary Information sheets, which contain information on our products, their intended target market, an overview of our product review process and the outcome of our fair value assessments.

View Fair Value Assesments for more information.

Consumer Understanding Outcome

The FCA expects firms’ communications to support and enable customers to make informed decisions about financial products and services. This includes customers to be given the information they need, at the right time, and presented in a way they can understand.

What is Arch doing to comply with this outcome?

Across our business, we’re mapping and testing internal communications from all points of the customer journey.  This testing considers all distribution frameworks and segmented customer bases.

Consumer Support Outcome

The FCA expects firms to provide a level of support that meets customers’ needs throughout their relationship with the firm. For example, monitoring and providing appropriate support so customers do not face unreasonable barriers when trying to amend their policy or when making a claim or complaint.

What is Arch doing to comply with this outcome?

We regularly monitor the customer support we and our third parties provide and where we find issues and areas that we need to improve, we make it a priority to fix them.

We’re conducting a detailed customer journey mapping to predict any pain points where foreseeable harm could occur and implementing corrections. We are additionally enhancing our MI, especially around identifying customers with vulnerable characteristics so we can adapt our approach accordingly.

All employees dealing directly with customers are also being appropriately trained to identify individuals in vulnerable circumstances and how to provide appropriate support. 


Culture

The right culture is paramount to achieving good outcomes for customers, who must be central to the firm’s strategy and operations in respect of the Consumer Duty.

We know the culture at Arch supports the requirements of the Consumer Duty, it’s something we are hugely proud of.  We have appointed a Consumer Duty Champion, who is an advocate for customer interests on the board and the project is sponsored by senior management. We are using the Consumer Duty as an opportunity to review, refresh, and update how we train, engage, and oversee our people and further enhance our commitment to our partners and our customers.

Monitoring
Outcomes

With the new Consumer Duty, the FCA has signalled a higher standard and a shift to focusing on customer outcomes. The FCA expects firms to monitor and regularly review the outcomes for their customers to ensure that they are consistent with the Duty.

At Arch, we are reviewing all current MI collected and undertaking work to expand our customer centric data. This will help us monitor and assess whether good customer outcomes are continuing to be met. It will also highlight where customers are in danger of, or are, not receiving good outcomes, so this can be immediately rectified. We will work together with our partners across the distribution chain to identify additional data, such as customer survey results, to further enhance our understanding of the outcomes customers receive.

Customers in Vulnerable
Circumstances

The Consumer Duty builds on the FCA’s work to improve outcomes for customers in vulnerable circumstances. Firms need to make sure the needs of customers in vulnerable circumstances are considered and factored into at all points of the customer lifecycle.

At Arch, we’re working hard to review and update our existing communications, product information, policies, and procedures ensuring customers in vulnerable circumstances receive the support they need. Tailored and updated training is being delivered to all employees. We are also using multiple sources of data and information to help us better understand our view of vulnerability across products and customer groups.

Key Definitions

What is a manufacturer?

A firm involved in creating, developing, designing and/or underwriting a contract of insurance.

View the Financial Conduct Authority’s (FCA’s) definition of manufacturer.

What is the distribution chain?

** All firms involved in the manufacture, provision, sale and ongoing administration and management of a product or service to the end retail customer.

FG22/5: Final non-Handbook Guidance for firms on the Consumer Duty (fca.org.uk)

What is foreseeable harm?

Where we can identify and predict negative impact and foresee harm with the information available and known to us. What is reasonableness? The approach expected from Arch or its representatives to ensure the delivery of good customer outcomes having considered all relevant circumstances.

FG22/5: Final non-Handbook Guidance for firms on the Consumer Duty (fca.org.uk)

What is material influence?

Involvement in, or decision making on any activity forming part of the customer journey that has the potential to impact customer outcomes. This includes, but not limited to the design or operation of products or services, including their price and value, the distribution of products or services, preparing and/ or approving customer communications and involvement in post-sale services e.g. claims handling or complaints handling.

FG22/5: Final non-Handbook Guidance for firms on the Consumer Duty (fca.org.uk)

What is a contract of large risks?

* Large risk must meet two of three criteria. They must be a commercial policyholder with; more than 250 employees, a turnover of more than €12.8m, or a balance sheet over €6.2m.

View the FCA’s definition of contracts of large risk.

Visit the FCA’s website for more information on Consumer Duty.