Consumer duty

The Consumer Duty represents what the FCA calls a ‘paradigm shift’ in its expectations of businesses. Regulated firms must assess and evidence that we are delivering good outcomes for our customers at all times. All parties in the distribution chain need to proactively review products, the customer journey, the way we communicate with customers and consider changes in areas ranging from governance and accountability to pricing, distribution, learning and development.

There are four categories of customer outcomes and we at Hiscox have actions in place to ensure readiness across them all:

1. Products and services
2. Price and value
3. Consumer understanding
4. Consumer support

The Consumer Duty raises the bar and goes further than TCF. It represents a fundamental shift by (i) raising the bar from fair to good outcomes (ii) emphasis on customer outcomes rather than a firm’s action (iii) focus on prevention and testing (iv) supporting cultural change by embedding the Duty through a firm’s strategy, leadership, governance and people.

No, Please refer to the scope in the policy statement here (external link).

We both have roles and responsibilities under the Consumer Duty. Focusing on the outcomes:

In respect of outcomes one and two – Product and Service, Price and Value

Hiscox is responsible for providing you with the main features of the product, target market information, our distribution strategy and the outputs of the fair value assessment.

It is the responsibility of distributors to distribute the products in accordance with the distribution strategy. It is also their responsibility to ensure that there is nothing in the distribution arrangements that could have an impact on the value of the product.

For outcome three – Consumer Understanding

Hiscox is responsible for providing you with appropriate documentation and tailor our approach to support customers with characteristics of vulnerability. It is the responsibility of distributors to also consider their communications are easily understood and that they are proactive and responsive to customer vulnerabilities.

For Outcome four– Consumer Support

We have identified and mapped all customer journeys, identified opportunities to enhance the customer touch-points, enhanced the external insights we use as well as controls to support good customer outcomes. In order to be successful here, our distributors should identify and review the key customer touchpoints, use insights and MI to assess and enhance the customer journey, paying particularly close attention to supporting vulnerable customers.

A Delegated Authority (DA) is an arrangement under which we appoint a third-party intermediary to act as our agent and involves the ‘outsourcing’ of certain functions (I.e. underwriting) to that third-party.

We cannot contract out of our regulatory obligations for the activities we have outsourced and therefore we need to take reasonable care to supervise such arrangements. When selecting a DA as a distribution channel for our products, ensuring that this chosen distribution continues to deliver good customer outcomes is at the heart of that decision. This is embedded within our existing oversight and governance framework.

Generally, Hiscox remains the primary product Manufacturer for products distributed under our DAs and therefore these products are subject to the same product, pricing and Fair Value Assessments.

The role of the broker under a DA will depend on the scope and terms of their DA contract with us. Our existing oversight and governance framework takes into consideration the service and value offering, alongside broader controls and standards surrounding customer support and understanding.

We are working to enhance the customer outcomes monitoring MI at each DA level to further enhance this oversight and data sharing with our DA broker partners.

Our DA brokers are provided with a tailored ‘Information to Distributors form’ as a Schedule to their DA contract. This provides the information they need for their arrangement and products, including links to the relevant Fair Value Assessments.

The Consumer Duty applies to firms in the distribution chain that can influence material aspects of the design, target market or performance of a retail financial services product or service, even where they do not have a direct relationship with the retail customer.

In respect of outcomes one and two – Product and Service, Price and Value

Hiscox is responsible for providing you with the main features of the product, target market information, our distribution strategy and the outputs of the fair value assessment.

It is the responsibility of distributors to distribute the products in accordance with the distribution strategy. It is also their responsibility to ensure that there is nothing in the distribution arrangements that could have an impact on the value of the product.

Specifically in wholesale relationships, where there is a relationship with a sub-broker , the wholesaler should ensure that they provide appropriate information within good time to allow the retail broker to discharge their responsibilities. In addition, the wholesale brokers should consider the complete distribution chain when assessing whether their distribution strategy is not impacting good customer outcomes.

For outcome three – Consumer Understanding

Hiscox is responsible for providing you with appropriate documentation and tailor our approach to support customers with characteristics of vulnerability. It is the responsibility of distributors to also consider their communications are easily understood and that they are proactive and responsive to customer vulnerabilities.

For Outcome four – Consumer Support

We have identified and mapped all customer journeys, identified opportunities to enhance the customer touch-points, enhanced the external insights we use as well as controls to support good customer outcomes. In order to be successful here, our distributors should identify and review the key customer touchpoints, use insights and MI to assess and enhance the customer journey, paying particularly close attention to supporting vulnerable customers.

There are responsibilities on both distributors and manufacturers to inform the chain where they:

• Identify circumstances that may adversely affect customer
• If product no longer delivers fair value
• If a communication is no longer delivering good outcomes
• If they identify an issue following a review

Additionally, firms are required to notify the FCA if they become aware that another firm in the distribution chain is not complying with the Duty.

If you become aware that the outcomes are not being met, or if customers are at risk of harm, there is a new requirement to notify all in the distribution chain. The most direct route for you to notify Hiscox is for you to complete this form and send to [email protected], this can also be found on the Product Governance page.

You will find our Target Market Statements, outputs of our Fair Value Assessments and other Distributor information here. You can also find this by typing ‘Hiscox Product Governance’ into Google. This is a live website so will always contain the latest information.

We also would welcome any information you are able to share regarding your own Fair Value assessments or Consumer Duty readiness as we work together to collectively deliver good customer outcomes.

As noted under 4 above, our DA brokers are provided with a tailored ‘Information to Distributors form’ as a Schedule to their DA contract. This provides the information they need for their arrangement and products, including links to the relevant Fair Value Assessments. Therefore, all DA Brokers should have the information they require. If you receive a DA query with regards to the outcome of our Fair Value Assessment, please forward this onto the DA Manager, Rosie Coward.

• For general information, Fair Value Assessments, etc, please go here - Product oversight and governance information
• If you are looking to make a Consumer Duty notification, please complete this form and send to [email protected].
• If you have a Delegated Authorities relationship with Hiscox and require any specific support, please contact [email protected].
• Otherwise, our broker team are here to help. Please find your local contact here.