Finalised FCA Consumer Duty published
The Financial Conduct Authority (FCA) is to allow more time to prepare for the requirements within the Consumer Duty giving firms until 31 July 2023 to implement the rules for new and existing products and services that are open to sale (or renewal), and until 31 July 2024 for closed book offerings.
The FCA said it would be introducing a phased approach to implementing the Consumer Duty in Policy Statement 22/9 (PS22/9) recognising that its new rules set higher standards across the industry and that more time was ‘essential’ for firms to apply the new rules effectively. Financial services trade associations, including BIBA, had argued that the initial nine-month implementation period ending on 30 April 2023 was too ambitious and challenging.
As expected, the FCA did not implement wholesale changes or deletions to the proposed rules set out in Consultation Paper 21/36 (CP21/36), rather it refined what it had published after receiving feedback from firms in the form of 151 written responses as well as from considerable industry engagement during the consultation period. Members may access PS22/9 here.
The FCA said that it will be monitoring to see that firms are making full use of the implementation period, and are planning and prioritising implementation work effectively so that they meet the standards required by the Consumer Duty.
The regulator has set out its expectations and a roadmap for how firms should use this implementation period to effectively embed the Duty in Chapter 12 of the feedback statement. The FCA called its approach ‘assertive’ and it is aimed at reducing the risk and challenges associated with implementing the new rules. The FCA has set out a clear expectation that:
By the end of October 2022, firms’ boards (or equivalent management body) should agree implementation plans and maintain oversight of their delivery, to ensure the implementation work is sufficient to meet the Duty standards. Firms should expect to be asked to share implementation plans, board papers and minutes with supervisors and be challenged on their contents.
Manufacturers should complete all the reviews necessary to meet the four outcome rules for their existing open products and services by the end of April 2023, so that they can:
share with distributors by the end of April 2023 the information necessary for them to meet their obligations under the Duty (eg in relation to the price and value, and products and service outcomes)
identify where changes need to be made to their existing open products and services to meet the Duty and implement these remedies by the end of July 2023
Firms will need to engage with the FCA if they are considering withdrawing any products or services due to the Duty, so that the regulator can identify if there are any potentially significant impacts on consumers.
BIBA members’ compliance and regulation queries should be directed to: compliance@biba.org.uk quoting their membership number.
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