With just over two weeks to go until firms are required to have their Consumer Duty implementation plans in place, the FCA has published additional information, which is based on queries they have received. Interestingly, this also reflects concerns our clients have raised directly with us.
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Implementation Plans:
The FCA requires firms to have clear plans in place by 31st October 2022 setting out how they will implement the Consumer Duty. By that date, they should have drafted, scrutinised and challenged their plans and be able to provide assurance that they will meet Consumer Duty requirements for new and existing products by 31st July 2023. However, they are not required to have the plans fully scoped out, or executed by then.
Where firms are working with third parties in preparing for Consumer Duty, they should ensure that their plans allow sufficient time to scope out and complete this work.
The FCA has also reiterated that firms can expect to be asked to share their implementation plans, Board papers and minutes with their supervisor at the FCA and that they will be challenged on the content.
Consumer Duty Board champions:
The FCA expects firms to appoint a Consumer Duty Champion who will support the Chair and the CEO in making sure that Consumer Duty is being regularly raised at Board and senior management level. The Champion should also be responsible for making sure that the Board is regularly challenging its management team on how it is embedding the Consumer Duty and keeping good outcomes for customers at the heart of its business. Ideally, they should be an Independent Non-Executive Director (iNED), although the FCA has said that this expectation can be applied in a proportionate way and they would not expect the same level of formality in smaller firms.
Some firms have asked if the Chair can be the Champion, rather than an iNED and while the FCA has said that they envisage the Champion working with the Chair, firms can apply their own judgement and set up the role in a way that is effective for their organisation.
The FCA has also reminded firms that the Champion is not solely responsible for Consumer Duty – all Board members are collectively responsible for Consumer Duty and the Champion is responsible for ensuring that it is discussed at the Board.
Closed products:
Consumer Duty comes into effect for closed products and services from 31st July 2024. The FCA has provided further clarification about what closed products are. They are products which are no longer marketed or distributed to retail customers or open to renewal. If existing customers can continue to make payments under the existing product terms this would still be considered to be a closed product, as long as the product or service is not open to new customers. For example, a savings product which is no longer sold to new customers, but existing customers can continue to make deposits, would be considered to be a closed product.
If you need support with any aspect of Consumer Duty, please do give us a call. You can access our Consumer Duty resource bundle here, this will provide access to.
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Consumer Duty Webinar Recording
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Consumer Duty FAQ Panel Session Recording
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Consumer Duty Four Outcomes Key Questions Resource
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