FCA Consumer Duty
Evidence of FCA Consumer Duty Compliance
UK firms must pay close attention to regulatory implementation deadlines as they begin embedding the new consumer duty throughout their businesses, according to one legal expert.
The Financial Conduct Authority (FCA) had acknowledged that compliance with the new consumer duty (161-page / 1.08MB PDF) “may be an extensive and complicated process for some firms due to the higher standards the regulator will expect and the duty’s wide ranging scope”.
Firms being asked to think about what good outcomes look like for their target customer base across a range of areas and being asked to do so from the point of view of standing in their customers’ shoes, firms will welcome the FCA’s move away from its original plan for a nine-month implementation period,” The regulator will instead take a two-stage approach. The duty will apply to existing products and services that consumers can buy or renew from 31 July 2023 and be extended to cover products and services in ‘closed books’ from 31 July 2024.
What you need to do
Firms will have to keep an eye on the clock to ensure they meet the FCA’s other roadmap implementation deadlines and conduct their internal reviews to identify changes they need to make. While the ‘go live’ date for the duty has been pushed back from the original timeline the FCA proposed, firms should be under no doubt that the regulator is very focused on how firms use their time now and note the FCA is saying it is taking an ‘assertive approach’ to the implementation period”.
Whatever stage of planning you’re currently working on, it’s clear that ensuring a smooth transition will require considerable time, attention, and resource from even the most well-prepared team.
But with MCM’s implementation support, we’ll be behind you every step of the way – offering valuable insight from our seasoned team of consultants – and help you achieve the critical deliveries.
Our subject matter experts can provide an impartial, detailed health check of your approach to root out any inefficiencies or blind spots that prevent you from operating a well-oiled machine from day one – whilst ensuring your processes are flexible and robust enough to adapt to future regulatory directives.
Consumer Duty Frequently Asked Questions
What is the FCA Consumer Duty and who does it apply to?
The FCA Consumer Duty is a new set of rules proposed by the FCA to improve the treatment of consumers by FCA-regulated firms. It will apply to all FCA-regulated firms that deal with retail clients, including banks, insurance companies, investment firms, and other financial institutions.
When will the FCA Consumer Duty come into effect?
The FCA has not yet finalized the Consumer Duty rules, but it is expected to come into effect in 2022. FCA-regulated firms will have a transition period to implement the new rules and make any necessary changes to their policies and procedures.
What are the key principles of the FCA Consumer Duty?
The Consumer Duty has three main principles:
- Principle 1: Firms should act in the best interests of retail clients.
- Principle 2: Firms should take reasonable steps to enable retail clients to make informed decisions.
- Principle 3: Firms should act in good faith towards retail clients.
What are the implications of the Consumer Duty for FCA-regulated firms?
The Consumer Duty will require FCA-regulated firms to prioritize the needs and interests of their customers over their own business interests. Firms will need to ensure that they have robust policies and procedures in place to deliver fair outcomes for customers, and that they are taking reasonable steps to enable customers to make informed decisions.
How can a compliance consultancy company help FCA-regulated firms with the Consumer Duty?
A compliance consultancy company can provide guidance and support to FCA-regulated firms in understanding and implementing the new rules of the Consumer Duty. They can help firms to identify any gaps in their current policies and procedures, and provide recommendations for changes and improvements to ensure compliance.
What are the potential consequences of non-compliance with the Consumer Duty?
Non-compliance with the Consumer Duty could result in regulatory action, including fines, sanctions, and reputational damage. FCA-regulated firms that fail to meet the new rules of the Consumer Duty risk losing their license to operate and facing legal action from consumers.
How can FCA-regulated firms prepare for the implementation of the Consumer Duty?
FCA-regulated firms can prepare for the implementation of the Consumer Duty by reviewing their current policies and procedures and identifying any gaps or areas for improvement. They can also seek guidance from a compliance consultancy company to ensure that they are fully prepared for the new rules when they come into effect.
Will the Consumer Duty apply to all types of financial products and services?
Yes, the Consumer Duty will apply to all types of financial products and services that are provided to retail clients. This includes banking products, insurance products, investment products, and other financial services. FCA-regulated firms will need to ensure that they are delivering fair outcomes for all customers, regardless of the product or service they are providing.