With the FCA’s Consumer Duty coming into force on 31 July 2023 (for new and existing products and services) and its focus on becoming a more assertive regulator, we take a look at the FCA’s expectations for businesses to:
- treat customers fairly
- ensure good outcomes
- demonstrate appropriate compliance
and, in particular, consider what this means in the context of vulnerable customers.
- Has your firm assessed its culture, strategy and objectives?
- Is appropriate monitoring of the treatment of vulnerable customers in place?
- Is the firm focused on achieving good outcomes?
- Can you demonstrate that responsibilities under the Duty have been met?
In July last year, the FCA set out the final rules and guidance for the new “Consumer Duty” (“Duty”). On 31 July this year, the first phase comes into force for new and existing products that are open to sale or renewal, with the second phase for closed products and services coming into force on 31 July 2024. The introduction of the Duty promises to be one of the biggest shake-ups to financial services regulation in over 15 years and will put retail customers at the heart of any planning for financial services and products.
The Duty forms part of the FCA’s transformation to becoming a more assertive and data-led regulator. It will enable them to quickly identify practices that don’t deliver the right outcomes for consumers and take action before practices become entrenched as market norms.
The FCA has made it clear that they expect Boards/Governing Bodies and senior management to have collective responsibility and accountability, in line with the Senior Managers and Certification Regime, to ensure good outcomes for retail consumers central to their firm’s culture, strategy and business objectives. Firms will be required to demonstrate compliance with the required good outcomes throughout the product journey and the FCA is committed to taking “robust action” where harm or risk of harm to retail customers justifies such action and use “enforcement and intervention powers more actively”, which may include interventions and investigations, as appropriate.
Read the full paper here: It’s Your Duty to be (Consumer) Dutiful