The FCA has issued eight of the sixteen sector-by-sector guidance letters for Consumer Duty. The other eight sectors will receive theirs shortly. We have active clients in fifteen of the sixteen individual sectors, so we know Consumer Duty is exercising their minds.
With an implementation deadline due in July 2023, the FCA is being proactive in its advice and guidance – all aimed at making sure firms implement the right behavioural changes, on time.
We are aware that some firms do not appreciate that Consumer Duty is all encompassing, so it’s worth repeating some of the key requirements:
- Products and services should be designed to meet the needs, characteristics, and objectives of a specified target market
- Those services must provide fair value with a reasonable relationship between the price consumers pay and the benefit they receive
- Firms must communicate in a way that supports consumer understanding and equips them to make effective, timely and properly informed decisions
- Firms must provide customer support that meets consumers’ needs throughout the life of the product or service
It is also worth noting that Consumer Duty demands more than simply compliance with regulations by reference to policies and procedures. Firms need to embrace how they develop the data programmes required to monitor compliance with the Duty on an ongoing basis. The regulator is particularly critical of firms who assume they can get by with repackaging or supplementing existing data. As it states, “they risk not thinking deeply or afresh about the types and granularity of data that they will actually need to monitor and evidence outcomes under the Duty effectively.”
In addition to the sector guidance, the FCA has also conducted a review of firms’ current implementation plans and as part of its feedback it highlighted a gap in firms’ planning, reminding them of the need to assess, test, understand and evidence the outcomes their customers are receiving. Without this, it will be impossible for firms to know that they are meeting the requirements set out in the Duty.
The FCA has given due warning and identified implementation plan gaps. Its message could not be clearer – are you ready? If not, or even if you are not sure, give us a call to see how we can help.