By Andrew Massey and Robert Lloyd
With effect from 31 July 2023*, a new Consumer Duty will require firms conducting regulated activities in the UK to act to deliver good outcomes for retail customers. The FCA has conducted a review of the implementation plans of a number of larger firms, and published its findings on 25 January 2023.
Although pertaining to larger firms, the findings – particularly the examples of good practice and areas for improvement – are intended to be “useful” for all firms preparing for the Duty. The underlying concern identified by the FCA is the risk that firms may not be ready in time, or may struggle to embed the Duty effectively throughout their business.
Based on the FCA’s key findings, firms should review their implementation plans and ask the following questions:
1. Are we appropriately prioritising our implementation efforts?
Specifically: Are our efforts focussed on reducing the risk of poor consumer outcomes? Have we identified gaps, and the areas of our business that are furthest away from the requirements of the Duty?
2. Are we embedding the Duty throughout our organisation?
Specifically: Have we comprehensively considered the substantive requirements and the adequacy of our existing arrangements? Are our senior leaders driving the changes needed to meet the Duty? Will the efforts embed the Duty and a focus on consumer outcomes in the culture of the organisation?
3. Are we engaging with other firms?
Specifically: Have we identified where we need to work with other firms to implement the Duty, considering the full distribution chain and service providers? Do our plans provide for sufficient engagement with these firms? Are we focused on what new or additional information may need to be shared with other firms?
* For closed products or services, the rules come into force on 31 July 2024.