In a new publication, the FCA has issued its’ much anticipated Consumer Duty Policy Statement PS22/9 and Finalised Guidance FG22/5 which will “set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first”.
As a reminder, the new Consumer Duty comprises of:
- A Consumer Principle – ‘a firm must act to deliver good outcomes for retail clients’, which reflects the overall standards of behaviour the FCA wants from firms, and which is developed by the other elements of the Consumer Duty.
- Cross-cutting rules which develop overarching expectations that apply across all areas of firm conduct:
- act in good faith towards retail customers
- avoid foreseeable harm to retail customers, and
- enable and support retail customers to pursue their financial objectives
- Four outcomes which give more detailed expectations for the key elements of the firm-consumer relationship, covering:
- Products and services
- Price and value
- Consumer understanding
- Consumer support
Fundamentally, the new rules should see firms actively putting consumers’ interests at the forefront of everything they do, not only acting with good intentions but monitoring, evaluating, and improving processes to ensure they can evidence good outcomes.
The FCA has extended the originally proposed implementation deadline of 30 April 2023. Firms will now have until 31 July 2023 to ensure compliance for new and existing products or services that are open to sale or renewal, and until 31 July 2024 for closed products or services.
However, this does not mean that firms can delay action. The FCA has made clear that firms should use the full implementation period and be able to demonstrate progress if required. This includes the expectation that “firms’ boards (or equivalent management body) should have agreed their implementation plans and be able to evidence they have scrutinised and challenged the plans to ensure they are deliverable and robust” by the end of October 2022.
RWA has launched a Consumer Duty gap analysis to help firms implement the new rules and guidance. If you would like more information about this, please contact your RWA Business Manager or get in touch via email at email@example.com or call 01604 709509.
Additionally, our Aviva Development Zone Course of the Month for July is ‘An Introduction to the Consumer Duty’ which provides an overview of and introduction to the new regulation. If you are not already signed up to the system, go here to access a 14-day free trial: https://mydevelopment.zone/#getStarted. Further learning content on the Consumer Duty will follow over the coming weeks.