FCA warns firms to “accelerate” consumer duty implementation

The FCA has issued recommendations for what firms should prioritise in the final six months before the Consumer Duty comes into force.

The financial regulator looked at a sample of implementation plans, finding that some firms were running “the risk that they may struggle to apply the Duty effectively once the rules come into force.”

It found three particular areas that firms should focus on, the first being prioritising and focusing on the areas that will make the biggest impact on outcomes.

The FCA urged firms to make the changes needed so that consumers would “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.”

It also encouraged firms to work closely and share information with commercial partners, saying that “some firms need to accelerate this work to implement the Duty on time.”

The rules will come into force for new and existing products on 31 July 2023.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, 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.’

The research was based on a request to around 60 of the largest firms.