Customer standards: Consumer duty and non-financial conduct

Introduction

We're committed to putting customer needs first, complying with the FCA's Consumer Duty ("the Duty") requirements and conducting business in an environment that is safe for our customers and staff.

The Duty sets higher and clearer standards of consumer (retail customer) protection across financial services and we're dedicated to meeting those standards. In accordance with PRIN 2A.2.2R, we recognise our obligation to act to deliver good outcomes for retail customers. Our approach is built on the three cross-cutting rules outlined by the Duty:

Acting in good faith
Avoiding foreseeable harm
Enabling customers to pursue their financial objectives

These principles are at the heart of how we operate‍—‌shaping our culture, governance, and processes.

As a result, we also expect our customers to uphold these values and work towards delivering positive outcomes for their retail customers, as outlined in our Master Services Agreement (MSA).

This document sets out our expectations for how you, as a customer, will comply with the Duty and it covers the following areas:

Scope: Which of our customers this document applies to
Minimum standards: The minimum standards we require for adhering to the Consumer Duty principle
Communication: How we expect you to communicate with us about instances where your retail customers experienced poor outcomes or where the principle of Consumer Duty may not have been followed
Oversight: How we take measures to make sure we have oversight of how your retail customers are receiving good outcomes
Non-Financial Conduct‍—‌Termination for Inappropriate Conduct: Our commitment to do business in an environment that is inclusive and safe for everyone

Scope: Does this apply to you?

Businesses with Retail Customers

This guideline is for all customers who act as co-manufacturers or distributors of any of our products and services that are used by end retail customers‍—‌whether those customers are direct or indirect. If your business is the end user of our product or service, that is, you are a basic customer only, this guidance won't apply to you.

Regulated and Non-Regulated Businesses

Most of our customers are regulated by the FCA, meaning they are required to meet the FCA's Consumer Duty requirements and may already have processes in place to follow these principles. However, some of our customers may not be regulated and therefore aren't legally required to follow Consumer Duty rules.

Regardless of regulation status, we expect all our customers to align with Consumer Duty principles to ensure good outcomes for end retail customers. For those not directly subject to Consumer Duty regulations, we'll provide the necessary background information and guidance within this document to help you meet these expectations.

Minimum Standards for Consumer Duty

What is Consumer Duty?

Consumer Duty (the "Duty') is a piece of regulation set by the FCA. The Duty sets the standard of care that regulated firms should give to consumers (retail customers) in the course of its business, with a focus on delivering good outcomes for these consumers. These outcomes border on four areas:

Products and services: Products and services should be designed to meet the needs, characteristics and objectives of a target group of customers and should be distributed appropriately.
Price and value: Products and services should offer fair value, balancing price with the benefits provided. Manufacturers must assess and review product value regularly, sharing relevant information with distributors to support this. Distributors must also ensure fair value is maintained throughout the distribution process.
Customer understanding: Information should be provided to enable retail customers to make informed decisions about financial products and services. This information should meet customer needs, be at the right time, and presented in a way they can understand. Firms that are not authorised to provide advice should give customers clear, helpful information to support informed decisions without crossing into advisory services.
Customer support: Effective support, which meets retail customer needs and avoids unreasonable barriers, should be provided. Digital-only firms should still ensure good outcomes and offer an exceptions process, like phone support, for complex issues.

Consumer Duty and the Distribution Chain

The Duty applies to all firms in our distribution chain, including manufacturers, distributors, and those involved in the sale, provision, and ongoing administration of our products and services to end retail customers.

A manufacturer is someone who creates, develops, designs, issues, manages, operates or carries out a product or service.

A distributor is someone who offers, sells, recommends, advises on, arranges, deals, proposes or provides a product or service. All of Griffin's customers are distributors if they have their own customers.

Co-manufacturing position‍—‌There can be multiple manufacturers who can each determine or materially influence the essential features of a product or service or the main elements of a product or service, including its target market. This applies to your business where both Griffin and you are manufacturers of:

A Griffin product‍—‌e.g., an end retail customer account; or
You (as a business customer) product or service‍—‌where relevant.

Your business is a co-manufacturer in cases where you have input in relation to the account provided to your retail customers‍—‌for instance, where your brand appears on the account or you provide information to a retail customer in respect of their account. Your business would also be a co-manufacturer if you provide payment services in respect of an account with Griffin, including making payments to and from the account.

Overall Expectation of our Customers

For all our customers, regardless of whether you are regulated or not, we expect you to generally:

Put retail customers at the heart of your business and focus on delivering good outcomes for retail customers, whether they are direct customers or indirect.
Provide products and services that are designed to meet retail customer needs, provide fair value, help retail customers achieve their financial objectives and which do not cause them harm.
Communicate and engage with retail customers so that they can make effective, timely and informed decisions about financial products and services and can take responsibility for their actions and decisions.
Not seek to exploit retail customers' behavioural biases, lack of knowledge or characteristics of vulnerability.
Support retail customers in realising the benefits of the products and services you offer and act in their interests without unreasonable barriers.
Consistently consider the needs of retail customers, and how they behave, at every stage of the product/service lifecycle.
Continuously learn from and focus on the real outcomes that retail customers have.
Ensure that retail customers' interests are central to your culture and purpose and are embedded throughout your organisation.
Monitor and regularly review the outcomes that retail customers are experiencing in practice and take action to address any risks to good customer outcomes.
Support Griffin's compliance with the Duty.
Ensure that your board or equivalent governing body takes full responsibility for ensuring that these points are properly embedded within your business.
Tell Griffin if there is a breach of any of these points.

Expectations for Products and Services

We expect you to have processes in place that:

Identify the target market for the product or service.
Ensure that all relevant risks to the target market are identified and assessed.
Ensure that tests (which may include scenario tests) are conducted to make sure the product meets target market needs, including vulnerable customers.
Make sure that if testing shows the product fails to meet customer needs, new products are not launched until remedied and for existing products, stop marketing, distributing, or renewing unless customers can easily switch to an equivalent alternative, or make necessary changes before continuing distribution.
Ensures products or services are regularly reviewed, considering events that may impact risks to the target market.
Ensure that the intended distribution strategy is appropriate for the target market.
Ensure all reasonable steps are taken to make sure that the product or service is distributed to the identified target market.
If issues arise that could harm customers, take action to mitigate harm, prevent further issues, and inform us.

Expectations in Relation to Price and Value of the Product or Service

We expect your business to:

Consider the fair value assessment at every stage of the product/service approval process.
Ensure that the product or service provides fair value to retail customers in the target market from the point at which the assessment is completed for a reasonably foreseeable period.
Carry out an initial value assessment of the product or service before it is marketed or distributed.
Carry out an initial value assessment of any significant adaptation of the product or service before it is marketed or distributed.
Set a schedule for review of the value assessment of the product or service appropriate to the nature of the product or service.
Review the value assessment of the product or service, throughout the life of the product or service and on a regular basis appropriate to the nature and duration of the product or service.
Where you are a "manufacturer" in the distribution chain and you identify in your value assessment of the product or service that it no longer provides fair value, take appropriate action to:
- Mitigate and, where appropriate, remediate any harm caused to existing retail customers
- Prevent harm to new retail customers
- Inform us of such situation

Expectations in Relation to Customer Understanding

We expect you to:

Ensure communications are clear, informative, and help retail customers make informed decisions.
Tailor communications based on customer characteristics, product complexity, and communication channels.
When interacting one-on-one with retail customers, tailor messages, check understanding, and create an open environment for customers to ask questions.
Test, monitor, and adjust communications to improve customer understanding of products and services.

Expectations in Relation to Customer Support

We expect you to put in place processes that:

Deliver support that meets the needs of customers, including those with characteristics of vulnerability.
Ensure that customers can use their products as reasonably anticipated.
Add appropriate steps in customer journeys to help customers understand their options and potential risks before making decisions.
Ensure that customers do not face unreasonable barriers (including unreasonable additional costs) during the lifecycle of a product or service.
Regularly check support quality, identify gaps, and take prompt action to improve.
Ensure that the customer support you provide does not disadvantage particular groups of customers, including those with characteristics of vulnerability.

Expectations for our Customers with Distributors in the Chain

Where your business uses distributors to deliver the product or service to the customer, we expect you to:

Have a distribution strategy for each product, appropriate for the target market, including distribution channels which you have selected for the target market.
Maintain, operate and review product distribution arrangements for each product where you use a distributor. These arrangements should contain effective measures and procedures to provide sufficient, adequate and reliable information to the distributor about the product.
Ensure distribution arrangements are consistent with fair value being provided to customers.
Inform us if issues have been identified at distributors which have resulted in poor outcomes to retail customers.

Expectations for our Customers who are Distributors of our Products and Services

Where your business is a distributor of our products and services, we expect you to:

Apply and follow distribution arrangements as outlined in our MSA, guidelines or other form of communication when distributing our product or service.
Ensure your distribution strategy (if there are any in place) is consistent with terms in our MSA, any information or guidelines we have provided to you and considers the fair value assessment for the product or service, particularly where the product or service is to be distributed with another product or service (which might be part of a package).
Regularly review your distribution arrangements (if there are any in place) throughout the life of the product or service to ensure they're still appropriate and up-to-date and remain consistent with any terms outlined in the MSA, support documents and guidelines we have provided to you.
Take action if you identify an issue arising out of a review or the product no longer provides fair value by making appropriate amendments, mitigate the situation where harm has been identified and prevent further harm, as well as, promptly inform us of any action taken.
Gather sales information of our products and services and provide that information to us if we ask for it.
Ensure the fair value obligations in relation to distribution of the product or service are met, including that distribution arrangements are consistent with fair value being provided to customers.
If you distribute products or services to other firms in the distribution chain, ensure that all information relevant to the value assessment for the product or service is passed to the distributor at the end of the chain.
Provide information in good time to other distributors where that information is requested or required so that the information can be communicated to retail customers.

Communication

We expect you to communicate with us with full transparency. This supports a good relationship and also helps us provide help when it is needed.

At minimum, we expect you to communicate to us if:

Any breaches to overall requirements under the Consumer Duty principles (as outlined above) are identified.
Issues are identified with the design of products and services that have the risk to or have caused harm to retail customers.
You identify, during value assessments, that the product or service no longer provides fair value to customers.
You are aware of any issues with communications that have caused harm to customers.
You identify any issues with your customer support procedures that have the risk to or have caused harm to customers.
Issues have been identified at distributors (where you are a manufacturer) which have resulted in poor outcomes to retail customers.
You are a distributor in the chain and you have identified issues arising out of a distribution strategy.

This is a non-exhaustive list. We expect you to inform us as soon as practicable of any event that could lead to foreseeable harm to retail customers.

How we Monitor your Consumer Duty Compliance

Our first line of defence (our Service teams) monitors the implementation and delivery of these standards. We monitor implementation and delivery at various stages of customer and product life cycle, including product development, ongoing business reviews, etc.

To help us meet our Consumer Duty obligations, we will ask our customers to share relevant data with us. This may be requested regularly (for example, on a quarterly basis), and we will give adequate notice each time.

We maintain the right to conduct periodic reviews of your business, or your customer's business. Our review may include requests for documentation including product policies, product development procedures, fair value assessments, customer support standards, complaints data, communication materials, etc. When we ask you for information for monitoring purposes, we will specify a timeframe for delivery.

Non-Financial Conduct: Termination for Inappropriate Conduct

We are committed to maintaining good outcomes and a safe, respectful and inclusive environment for our staff and customers. Accordingly, we reserve the right to terminate this agreement immediately upon notice if your employees, representatives or any associated individuals engage in behaviour that is aggressive, abusive, discriminatory, or constitutes bullying or harassment towards our staff or your retail customers.

Prohibited behaviour includes, but is not limited to:

Verbal abuse, threats, or intimidation
Discriminatory remarks or actions based on race, gender, religion, disability, sexual orientation, or any other protected characteristic
Harassment, bullying, or any conduct that creates a hostile or unsafe working environment

If such behaviour occurs or we become aware of it (e.g. through the complaints process), we will notify you of our concerns and request assurance that it will not be repeated.

If the behaviour persists, we may escalate the matter to a Board-level discussion between our respective firms to agree a solution. Where we deem it appropriate, we may request that the individual involved no longer interact directly with the impacted retail customer. In the event that our Boards are unable to reach an agreed solution within two weeks of our Board first initiating contact, we reserve the right to terminate the agreement between us with immediate effect on notice.

In the event of termination under this clause, we will not be liable for any refunds, damages, costs, or losses incurred by you. Any outstanding payments for services rendered up to the termination date shall remain due and payable.