Industry members have welcomed the Financial Conduct Authority extending consumer duty implementation deadlines but said “timelines remain tight”.
In a policy statement published today (July 27), the FCA announced that companies will have until July 31, 2023 to implement the consumer duty rules for all new and existing products and services that are currently on sale.
The implementation deadline will be extended for a further 12 months (until July 31, 2024) for closed book products to give firms more time to bring these older products, that are no longer on sale, up to the new standards.
The FCA previously said there would be an implementation date of April 30, 2023 but many firms complained this would not be enough time.
Aegon pensions director Steven Cameron, said the provider fully supports the FCA’s new consumer duty and its ambition to ‘level up’ all parts of the retail financial services industry, delivering good outcomes and putting customer needs first.
“This will involve a fundamental industry-wide review to make sure products and services meet customer needs and offer fair value, testing customers can understand all forms of communication and examining whether customer support is truly meeting needs,” he said.
“Carrying out such an all-encompassing review thoroughly will take time. We’re pleased the FCA has listened to requests for an extended and prioritised timeline. Deferring the deadline for ‘open’ products and services, albeit by only three months till July 2023, is welcome but timelines remain tight.”
Cameron said the extra year to implement changes for legacy books closed to new business is helpful, particularly for firms with policies many decades old.
Likewise, Pimfa head of public affairs Simon Harrington, said the duty has the potential to be “a transformative piece of regulation” which will substantially improve how firms serve consumers and work towards ensuring they receive superior financial outcomes.
“But for that to be the case, as we have previously argued, firms need more time to implement the new regulations,” he said.
“We welcome the fact that the FCA has now recognised that such a transformative piece of regulation does indeed require additional time for firms to implement new systems and processes to comply with it.”
Quilter commercial and propositions director David Tiller, said the delay to timescales was “sensible to ensure the new duty is implemented effectively.”
However, Lang Cat consulting director Mike Barrett said although it was a “sensible move”, there is still “a big sting in the tail for implementation”.
“Firms, and especially those who are directly supervised (ie, larger firms) need to be properly up and running in the next two months. There is also a fair bit to do for April.”
Resilient to change
Tiller explained that financial advice firms have proven time again to be resilient to change and most will be building on strong foundations but will have work to do to prove the value of their services.