FCA Consumer Duty – Implementation Toolkit

FCA has published its final rules and guidance for a new Consumer Duty that will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.

Acting to deliver good outcomes should be at the centre of firms’ strategies and business objectives.

FCA wants to see increased confidence from consumers, ensuring they are equipped with the right information and the right support to make effective, timely and properly informed decisions.  

The Duty includes requirements for firms to: 

• give fair value;
• ensure customers don’t face unreasonable barriers when they want to switch or cancel products or complain;
• provide helpful and accessible customer support;
• take appropriate action to mitigate the risk of actual or foreseeable harm;
• provide timely and clear information about products and services that customers can understand so they can make good financial decisions;
• provide products and services that are right for their customers; and
• focus on the real and diverse needs of their customers, including those in vulnerable circumstances, at every stage and in each interaction.

Throughout, the FCA references a renewed focus on the need for firms to understand how their customers behave in practice and how they make decisions. Firms will need to be able to demonstrate that they have considered consumer behavioural biases at all stages of the product lifecycle.

The rules require firms to monitor and regularly review the outcomes their customers are experiencing to ensure that their products and services deliver good outcomes and to take action where this is not the case. The consumer duty is also reflected in the SM&CR, with responsibilities on senior managers and all conduct rules staff to act to deliver good customer outcomes. 

The FCA is giving firms 12 months to implement the new rules for all new and existing products and services. The rules will be extended to closed book products 12 months later, to give firms more time to review what may be a large number of closed products. 

Firms are expected to make full use of the implementation periods – FCA has set down a timetable of key milestones, the first of which is the end of October 2022 when boards (or equivalent bodies) are expected to have scrutinised and agreed their firms’ implementation plans.

How the duty applies and what it means in practice will vary by sector and by firm. Some firms will already be meeting parts of the new standards through their compliance with existing handbook provisions, and the Duty will apply proportionately depending on the nature of firms’ offerings and their customer base. But all firms will need to map their business to the new Duty and be able to evidence how they are monitoring and acting to deliver good outcomes. 
The implementation timetable is likely to prove challenging and firms will need to begin assessing their business and what the Duty means for them without delay. 

To help you navigate this process, we have created our Consumer Duty Toolkit setting out the steps for firms to consider and how we can support you through your implementation programmes.