The FCA’s Consumer Duty: What should firms be doing now?
The FCA has recently confirmed its approach to the Consumer Duty, with most firms having to implement the new requirements by 31 July 2023.
The FCA has acknowledged that this sets a challenging timescale for firms to embed the Consumer Duty properly – firms only have a year to understand the required changes, review existing practices and implement new systems, controls, policies and procedures where required.
What are the new Consumer Duty requirements?
In its Press Release, the FCA sums up the requirements as follows:
“The Duty will include requirements for firms to:
- end rip-off charges and fees
- make it as easy to switch or cancel products as it was to take them out in the first place
- provide helpful and accessible customer support, not making people wait so long for an answer that they give up
- provide timely and clear information that people can understand about products and services so consumers can make good financial decisions, rather than burying key information in lengthy terms and conditions that few have the time to read
- provide products and services that are right for their customers
- focus on the real and diverse needs of their customers, including those in vulnerable circumstances, at every stage and in each interaction.”
This is an important indication of the breadth of the Consumer Duty, but there is so much more to do in practice.
What does my firm need to do?
Your firm’s Board is expected to have agreed an implementation plan before the end of October. This means that the Board should ideally meet twice before that date to discuss and agree the plan.
Whilst there are too many issues to address and list here, some of the key areas that you should be reviewing as part of the implementation plan include:
If any senior managers believe that the Consumer Duty is simply a rehash of MiFID product governance requirements, TCF and conduct risk, they are in danger of complacency.
The FCA is representing Consumer Duty as a key pillar of its recently published three-year strategy. It will expect firms not only to strive for the right outcomes, but will expect to see evidence of such outcomes as part of its aim to become a more credible and assertive regulator.
More on the Consumer Duty
Are you responsible for the implementation plan, training, controls, policies or procedures relating to the Consumer Duty?
Visit our dedicated page on the new Consumer Duty here.
About the Author
Peter has over 35 years’ experience in the field of regulation and compliance. A chartered accountant, Peter spent 6 years working with the UK’s SFA (now the FCA) and has headed up regional and global compliance functions at Paribas, UBS Investment Bank and Bank of America.
Since 2006, Peter has specialised in training, focusing on boards, senior management and assisting the next generation of compliance officers. His coverage includes most areas of compliance and financial crime, also corporate governance and risk management. His style is inclusive, interactive and based on practicalities, not just rules.