Reminder of Consumer Duty Deadline
On the 10th of May, the Executive Director of Consumers and Competition at the FCA delivered a speech reminding firms of the deadline for Consumer Duty implementation. The Consumer Duty comes into effect on the 31st July 2023 for “open-book” products, with an additional year for implementation for “closed-book” products. Within his speech Mr Mills reiterated that when the duty comes into force, that firms must be able to evidence how they are acting to deliver good outcomes for retail customers. Mr Mills’ speech was made in concurrence with the FCA’s review of Fair Value Frameworks, which found that within the review of implementation, firms needed to: adopt a holistic review of the fair value assessment, considering contextual factors for value whilst being able to assess different outcomes from a wide range of data sources.
The Consumer Duty is expected to be a cultural shift for firms, emphasising the importance of delivering good outcomes for retail customers whilst also reducing the risk of harm. In particular firms should look at how they document the manufacturing and distribution process, to ensure that they can evidence consideration of the Duty. The recent FCA’s focus on Fair Value seemingly reflects one of the harder outcomes to implement, with firms needing to consider how each relevant cost and charge is fair relative to the price paid by retail clients. With the deadline looming, in-scope firms must take proactive steps to ensure they are meeting the duty’s requirements, including updating their product governance processes, distribution oversight and controls and also ensuring customer support functions are fit for purpose.
