The FCA published its final policy statement and rules implementing its new Consumer Duty and guidance on how the Consumer Duty should work in practice. Firms will need to apply the Duty to new and existing products and services that are open to sale or renewal from 31 July 2023; and to products and services held in closed books from 31 July 2024. However, the FCA says that firms must have their board’s approval for an implementation plan by 31 October 2022 and take certain other steps.

In this article, online financial services solicitor Simon Deane-Johns outlines the steps firms should take to implement the Duty.

Next steps toward implementation of the Consumer Duty

The FCA expects the implementation of the Consumer Duty to receive board-level attention.

• By 31 October 2022, firms’ boards (or equivalent management body) should have approved their plan to implement the Consumer Duty, with evidence they have scrutinised and challenged the plans to ensure they are deliverable and robust. Firms will be asked to share their plans, board papers and minutes with supervisors and be challenged by the FCA on the contents.

• Boards should maintain oversight of their firm’s implementation plans to ensure they remain on track, and that work is sufficient to meet the Duty standards, taking a risk based approach and prioritising work that is likely to have the biggest impact on consumer outcomes, and consider completing work ahead of the deadlines where possible.

• At the end of implementation period, boards should assure themselves that their firm is complying with their obligations under the Duty and has identified and remedied any potential gaps.

• Product/service manufacturers should aim to complete their reviews to meet the ‘four outcome’ rules for existing open products and services by the 30 April 2023, and:
– share with distributors by the end of April 2023 the information necessary for them to meet their obligations under the Duty (e.g. price and value, and products and service outcomes);
– identify where changes need to be made to existing open products and services to meet the Duty by the end of 31 July 2023.

• Firms must prioritise action to remedy any serious issues they detect that are causing immediate consumer harm; and report to the FCA any significant breaches of any existing rules.

• Firms must inform the FCA if:
– implementation of the Duty involves considering whether to withdraw or restrict access to products or services in a way that will have a significant impact on vulnerable consumers or on overall market supply.
– they believe that they will not be able to complete all work necessary to be compliant with the Duty by the deadlines.

• Firms must notify the FCA if they become aware that another firm in the distribution chain is not complying with the Duty; and notify other firms in the distribution chain if the firm thinks they have caused, or contributed to, harm to retail customers.

To read further details about the Consumer Duty and to understand how the new rules will impact your firm, please click here.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.