The FCA's Consumer Duty, which came into force on 31 July 2023 for open products and services, represents the most significant shift in conduct regulation in over a decade. It sets a higher standard for the care that firms must provide to retail customers and introduces a fundamental expectation: that firms must act to deliver good outcomes, not simply avoid causing harm.
For firms holding accounts for customers they can no longer contact, the Consumer Duty creates a pressing new challenge. Gone-away customers, by definition, are not receiving good outcomes. They may be missing important communications about their investments, paying charges on products that are no longer appropriate, or simply unaware that they hold assets at all.
The Four Outcomes
The Consumer Duty is structured around four outcomes that firms must deliver:
- Products and services — Products must be designed to meet the needs of the target market and distributed appropriately.
- Price and value — Customers must receive fair value for the price they pay.
- Consumer understanding — Communications must be clear and enable customers to make informed decisions.
- Consumer support — Customers must be able to access support when they need it.
Gone-away customers fail on at least two of these outcomes immediately. They are not receiving communications, so consumer understanding is compromised. And they cannot access support because the firm has no means of reaching them and they may not even know the account exists.
The Obligation to Act in Good Faith
Underpinning the four outcomes is a cross-cutting rule requiring firms to act in good faith toward retail customers. The FCA has been explicit that this means firms cannot take a passive approach. Simply sending a letter to the last known address and filing it as "undeliverable" does not discharge the obligation.
Firms are expected to consider what a reasonable person in the customer's position would want and to take steps that reflect the customer's interests. For a gone-away pension customer with significant assets, that means making genuine efforts to find them, not simply adding them to a "gone away" register and moving on.
Proactive Engagement: A New Expectation
Before the Consumer Duty, many firms took a reactive approach to gone-away customers. They would attempt to trace customers if the customer made contact, or if a regulatory event (such as a scheme wind-up) forced the issue. Otherwise, the accounts sat dormant.
The Consumer Duty changes this calculus. The FCA expects firms to monitor outcomes on an ongoing basis and to take action when they identify that customers are not receiving good outcomes. A growing gone-away book is a clear signal that outcomes are deteriorating, and the duty requires firms to act on that signal.
This is particularly important for closed-book products and legacy schemes, where gone-away rates tend to be highest. The Consumer Duty applied to closed products from 31 July 2024, meaning firms can no longer defer the problem for legacy business.
Gone-Away Customers as a Duty Failure
Consider the position of a customer who moved home five years ago and left behind a pension pot worth £25,000. Since losing contact, they have not received annual benefit statements, they have not been informed of changes to the scheme, and they have not been able to make decisions about their retirement savings. If the fund was invested in a default strategy that no longer suits their risk profile or time horizon, the customer may be experiencing material financial detriment.
Under the Consumer Duty, the firm holding that pension has an obligation to demonstrate that it is delivering good outcomes for this customer. If it cannot even contact the customer, it is difficult to see how that standard can be met. The longer the customer remains unreachable, the greater the risk that the firm is failing in its duty.
How Real-Time Data Supports Compliance
The challenge for firms has always been practical: how do you find someone who has moved without telling you? Traditional tracing methods rely on credit reference agency data, which lags behind actual moves by several weeks. By the time the data is available, the customer is less likely to engage.
Real-time move data offers a different approach. By capturing address changes at the point they happen, through tenancy agreements and property completions, firms can identify when a customer has moved and reach out promptly. This matters because customers are most receptive to updating their records in the first few days after a move, when they are already working through their change-of-address list.
For Consumer Duty purposes, using real-time data demonstrates that a firm is taking reasonable and proactive steps to maintain contact with customers. It provides an auditable trail showing when the firm became aware of a move and what action it took, exactly the kind of evidence the FCA will expect when assessing whether a firm is meeting its obligations.
The Consumer Duty is not a one-off compliance exercise. It is an ongoing obligation to deliver good outcomes, and for the millions of gone-away customers across the UK, that starts with being able to reach them.