4 ways Consumer Duty is more than TCF

4 ways Consumer Duty is more than TCF

As the firms assess the FCA’s final guidance on Consumer Duty, Aveni has warned some consider the regulation as the Treating Customers Fairly (TCF) mandate in disguise. Aveni has outlined four areas where Consumer Duty and TCF differ.


Aveni begins by showing the difference between the purpose of the two.

It stated the TCF was designed to ensure firms have the right infrastructure, culture and framework to enable fair treatment of customers. The regulator wanted firms to consistently show “that fair treatment of customers is at the heart of their business model.”

As for the Consumer Duty, it is not about showing the FCA that the processes and frameworks are in place. Instead, it is showing the regulator that they’re effective in delivering good outcomes for customers.  Aveni stated, “The emphasis here is on outcomes.  Not just fair outcomes, but good outcomes.”


Aveni stated that the TCF made it the regulator’s responsibility to go in and figure out whether the company had acted in bad faith. Whereas, Consumer Duty puts the responsibility on the company’s shoulders to ensure their customers receive good outcomes and have a clear understanding of the products and services they are buying.


Aveni stated that supervision is where people are describing Consumer Duty as TCF with teeth. Firms have previously provided complaints data as an indicator of customer outcomes. It assumes that if someone does not complain, they are realising good outcomes.

Under Consumer Duty firms will need to define the customer journey and what a good outcome is. They would then need to show, with data, that customers continue to achieve this outcome throughout the customer lifetime, even when circumstances change.

It said, “You could argue that supervision under Consumer Duty might start to feel more like a section 166 skilled person’s review.  Under TCF, a review by the regulator mainly focussed on senior management, processes and controls, not the raw data from, for example, customer calls and other forms of communications.”

Many firms are not collecting customer data and if they do, they don’t have an accurate view of what is contained in it, Aveni added.


The final difference comes down to the main question the regulator asks under each regulation. Under the TCF, the regulator is asking if the company’s TCF framework is appropriate. Whereas, under the Consumer Duty it is asking whether customer outcomes are good.

“Outcomes-based supervision is much more difficult to ‘explain away’ which is what was happening under TCF and something the FCA are no longer willing to tolerate.”

In the past, firms could demonstrate to the regulator that all the right policies, training and frameworks and controls were in place. However, this was not demonstrating that they were giving fair outcomes to consumers. Outcomes is at the centre of Consumer Duty and the senior management and board will be on the hook if the firm falls short.

Read the full report here.

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