19 April 2023
In its Policy Statement (PS22/9) the Financial Conduct Authority (FCA) set out its rules for a new Consumer Duty; a ‘new Consumer Principle that requires firms to act to deliver good outcomes for retail customers.’
It is being described as one of the most fundamental regulatory change programmes in recent years.
The FCA expects that financial services firms have an understanding of their customers’ needs, are flexible, and ensure good customer outcomes. The Regulator is looking to instil a higher level of consumer protection where putting customers’ needs first is central. The Consumer Duty is being introduced in phases. ‘For new and existing products or services that are open to sale or renewal’, the rules come into force on 31 July 2023 and ‘for closed products or services, the rules come into force on 31 July 2024.’
We understand that firms are currently assessing the impact of the new Consumer Duty on their organisations and delivering programmes of work to ensure readiness.
With 31 July 2023 implementation date approaching, we wanted to understand where financial services firms are in their journey to meeting the Duty requirements.
This report sets out the findings of our recent survey, which gathered feedback on how far firms have progressed with their planning, the different interpretations of the requirements, their approaches to implementation and the key challenges that businesses are facing.
We have summarised the findings from our survey, which includes firms spanning the breadth of the financial services sector, and from small (0 to 50 employees) to larger (1,000 plus employees) organisations to obtain a range of insights and experiences.
- The Consumer Duty represents an opportunity to improve the business, by placing the customer at the centre of strategies and business objectives.
- To implement the Duty effectively will require senior-level engagement and commitment and a business-wide cultural shift may be required.
- Appropriate levels of resource and developing relevant MI with appropriate KPIs and KRIs will be key to ensuring successful implementation and ongoing monitoring of compliance.