FCA Reviews Firms' Consumer Duty Implementation Plans

The FCA has published its findings from a review of firms’ Consumer Duty implementation plans. Plans were expected to be in place by the end of October 2022 to allow firms the necessary time to carry out the required work and ensure compliance with the Duty by the 31^st July 2023 implementation deadline.

As well as increasing its’ understanding of industry progress, the review has been conducted by the regulator to provide insight into firms’ approaches to embedding the Duty within their businesses. The FCA has considered how well firms’ plans meet the requirements of the Duty, including the four outcomes, but also looked at their:

• Strategies to oversee implementation work
• Ability to meet the implementation deadline
• Engagement with other firms in the distribution chain
• Arrangements for identifying, monitoring and evidencing consumer outcomes
• Culture and people strategies to ensure all staff understand their responsibilities 

Many firms were identified as having effectively understood the requirements of the Duty and established substantial plans which embrace the focus on consumer outcomes. However, the regulator has identified that some firms may not have fully recognised the extent of work required to ensure compliance before the deadline. 

The FCA identified 3 key focus areas as: 

Effective prioritisation: Firms may need to review their plans and consider how they are prioritising the implementation of work. Focus should be given to reducing the risk of poor outcomes and to areas where firms may be furthest from compliance with the Duty. 

Embedding the substantive requirements: Some plans suggested that firms may not have fully considered the implications of the Duty or that they may be overly reliant on existing policies and procedures. Firms must ensure they consider all necessary changes when reviewing products and services, communications, and customer journeys. 

Working with other firms: Many plans did not include proper consideration for the sharing of vital materials with other firms in the distribution chain. It is essential that firms address this to ensure they have all the necessary information to identify areas where change may be required.

Next week, we will look at good practice identified by the FCA and how these aspects will help firms to meet the requirements of the Duty.

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 or require any assistance in relation to the new Consumer Duty, please contact your Compliance Consultant. Alternatively, get in touch via email at helpdesk@rwagroup.co.uk or call 01604 709509.