The FCA’s review of firms’ progress on implementing the Consumer Duty contains some important guidance for firms to follow in the lead up to 31 July 2023.

Key areas to focus on

  • Effective prioritisation – firms need to prioritise appropriately, focussing on reducing the risk of poor consumer outcomes and assessing areas where firms are furthest away from meeting the Duty.
  • Examine the substantive requirements of the Duty carefully and avoid over-confidence that existing procedures are sufficient – the scope of the Duty is extensive and we have seen that careful review of the new rules and definitions can lead to some surprising conclusions.
  • Work with other firms in the distribution chain – the FCA notes a lack of engagement to date between firms in distribution chains and suggests that this should become an area of focus. In our experience, this includes working with overseas firms that are not themselves authorised in the UK but can affect the ability of UK firms to meet their obligations under the Duty.

The good and the bad…

Below are headline summaries of a selection from the FCA’s list of good and bad examples. There is a lot of content in the FCA’s review, so we recommend reading it in full.

We would be happy to discuss your organisation’s implementation of the Duty, and how the FCA’s review may help inform it.

Next steps

The FCA’s review follows publication of its final rules and guidance in July 2022. Firms were expected to have their implementation plans in place by October 2022. Below are some key upcoming dates to note:

  • Soon: FCA to send survey to sample of firms to assess progress + FCA to conduct targeted engagement with smaller firms + FCA to issue letters to firms, highlighting expectations, key risks and consumer harms.
  • April 2023: Manufacturers to complete all reviews necessary to meet the four outcome rules + share information with distributors.
  • To July 2023: Second half of the implementation period.
  • 31 July 2023: Rules apply regarding new and existing products/services open to sale or renewal.
  • 31 July 2024: Rules apply regarding closed products/services.