The FCA has published a review of how companies are planning to implement the new Consumer Duty legislation set to come into force on 31 July 2023.
The new Consumer Duty regulation aims to ensure customers receive communications from financial services firms that they understand. It also ensures they are offered products that meet their needs.
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.
FCA executive director of consumers and competition Sheldon Mills said, “The Consumer Duty will bring about a step change in the way financial services firms treat their customers and we welcome the work firms are doing to implement it.
“Given the scale of the reform, we recognise that some firms need to make significant changes. For firms which are further behind in making the necessary changes, there is time to put that right and for them to show they are acting in the spirit of the new Duty.
“Firms will also see the benefits of the Duty, with increased trust in the sector, more flexibility to innovate and in time fewer rule changes.”
Over the next six months, the FCA wants companies to focus on a number of key areas. First of all, companies should prioritise effectively, with a focus on the areas that will make the biggest impact on outcomes for consumers.
The FCA urges firms to ensure they are making the changes needed so consumers receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.
Businesses also need to share information and work closely with their commercial partners to make sure they are all delivering good customer outcomes. The FCA has found that some firms need to accelerate this work to implement the Duty on time.
Last year, a report by MoneyHub found that over a third (38%) of firms have limited knowledge of the Consumer Duty, with many turning to technology and data to solve their woes.
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