| Link(s): | FCA highlights areas of focus for firms implementing the Consumer Duty | FCA Consumer Duty implementation plans | FCA |
Context
With 6 months to go before the Consumer Duty comes into force, the Financial Conduct Authority (FCA) has published a review of how firms are planning to implement the Duty. This identifies examples of good practice, and areas where firms may need to improve their implementation approach to deliver the Duty’s standards on good consumer outcomes.
Key points to note
The FCA reviewed a sample of implementation plans and found that many firms show they understand and embrace the shift to delivering good customer outcomes, which the Duty will bring, and have established extensive programmes of work to comply with it properly. However, the FCA also found that some firms are further behind in their planning, so there is a risk that they may struggle to apply the Duty effectively once the rules come into force.
Its review has highlighted three key areas where firms should particularly focus their attention during the second half of the implementation period (to 31st July 2023):
Effective prioritisation: Some plans were not clear on what the basis was for prioritising some implementation work ahead of other aspects. Firms should make sure they are prioritising appropriately, focusing on reducing the risk of poor consumer outcomes and assessing where they’re likely to be furthest away from the Duty’s requirements.
Embedding the substantive requirements: Although the FCA recognise plans were likely to be high level at the early stage they were reviewed, some plans suggested firms may have considered the requirements superficially or are over-confident that their existing policies and processes will be adequate.
Firms are urged to carefully consider the substantive requirements of the Duty, as set out in the final rules and guidance. Firms should ensure that, when they are reviewing their products and services, communications and customer journeys, they identify and make the changes needed to meet the new standards.
Working with other firms: To implement the Duty on time, many firms need to work and share information with other firms in the distribution chain. However, the FCA found some plans which gave little focus to this area. This suggests some firms may need to accelerate their work on this important aspect of implementation.
Next actions
All firms should review their Consumer Duty implementation plans to ensure they meet the FCA’s expectations.