Consumer Duty - A catalyst for positive change


Sharon Bellingham

Sharon Bellingham

Master Trust and IGC Lead.

With its mandate for supporting higher standards and driving better understanding and outcomes for consumers, the arrival of the Financial Conduct Authority’s (FCA) new Consumer Duty guidelines has real potential to be a catalyst for positive change across the workplace pensions industry. The new regulation came into effect on 31st July 2023 for open products, meaning that firms regulated by the FCA will be required to act to deliver good outcomes for retail customers on a number of outcomes including products and services, price and value, consumer understanding and consumer support.1

Interestingly however, occupational pension schemes regulated by The Pensions Regulator (TPR) are out of scope (although an exception arises where an FCA authorised firm provides services to, or creates products used by, a TPR regulated scheme). This means that some single employer trust arrangements and, most notably, some Master Trust arrangements may not be required to implement the higher standards that Consumer Duty sets out.

Clearly, this has potential to create a disparity in the market and the emergence of a two-tier landscape – the outcome of this could result in differing member experiences and communications, simply because of the type of pension scheme an employer chooses to operate.  

Scottish Widows is an FCA authorised firm and supports the operation of the Scottish Widows Master Trust (SWMT). Therefore, members of the SWMT will benefit from activity spurred by Consumer Duty, even though the SWMT is regulated by TPR. Additionally, the SWMT will benefit from the considerable investment in training for all colleagues, which will equip them to fully embrace the aims of Consumer Duty and to ensure that the application of its principles is embedded across the business; this means we can ensure support for all members. 

We already offer members tailored experiences based on their needs and this extends to vulnerable customers – being part of Lloyds Banking Group means we uniquely ensure vulnerable customers only have to ‘Tell us Once’ about their needs. And consequently, over 75% of vulnerabilities that we are aware of have come via other channels within the Group. We look to go further by supporting access to more sophisticated insight, in a way which will help us to gain new perspectives on member understanding and behaviour.  

We would encourage trustees of schemes which are not in scope to consider the new Consumer Duty requirements and the spirit of these regulations; there may be opportunities to incorporate these principles into the building blocks of their scheme and underlying governance framework.

Having a clear focus on outcomes and protecting members from harm, and further increasing the sophistication of member insight, will bolster governance and monitoring of member behaviours, as well as deepen trustees’ understanding of who their members are and help drive inclusivity. Increased focus on customer outcomes and the overall customer fair value framework that Consumer Duty requires could also lead to an acceleration of consolidation in the own trust market.  

Consumer Duty goes beyond a tick-box exercise – we will be measured against the outcomes we deliver for our members – and whilst it’s important that the 31st July compliance requirements are met, it’s key that we continue on the journey to improving all members’ outcomes; always evolving, developing and challenging ourselves.


Notes to Editor

[1] According to FCA, Consumer Duty.



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