The Financial Conduct Authority is arranging a series of regional in-person events for firms as a way to support them with the implementation of the new consumer duty.
As firms prepare for the new regulation, the FCA has published letters sent to the chief executive officers and directors of firms, listing timelines and how the duty applies to the firms.
It published letters today (February 3) to the following sectors:
- Asset Management, Custody & Fund Services and Alternatives
- Consumer investments
- Credit reference agencies and providers of credit information services
- General Insurance and pure protection firms
- Life insurance
- Mainstream consumer credit lenders
- Mortgage lenders and administrators
- Retail banks and building societies
Alongside this, the regulator said it will be arranging a series of regional in-person events for firms a way to support them with the implementation of the new consumer duty.
The events will be for specific groups of small and medium-sized firms.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “We want to thank firms for the hard work they’re putting into embedding the duty. We were encouraged to see many examples of good practice in our review of implementation plans and found that many firms are embracing the shift that the consumer duty brings.
“Putting good outcomes for customers at the heart of firms’ strategies and business objectives will build trust and modernise how we regulate financial services.”
Mills said leaders have a key role to play here.
The FCA said other sectors will receive letters very shortly. These will be for:
- Credit Unions
- Debt advice firms
- Debt purchasers, debt collectors and debt administrators
- Mortgage intermediaries
- Motor finance providers
- Payments services and E-Money
- Retail finance providers
- Credit brokers
The FCA first set out plans for a new consumer duty in May, stating it was designed to create a higher level of consumer protection in retail financial services.
Currently firms are bound by FCA rules and principles to treat customers fairly, which include offering products and services at fair prices.
But in May, the regulator said it had seen evidence of practices which caused consumer harm, including firms providing information which was misleadingly presented or difficult for consumers to understand.
The consumer duty will require firms to ask themselves what outcomes consumers should be able to expect from their products and services, act to enable rather than hinder these outcomes and assess the effectiveness of their actions.
The FCA said while its work on the duty pre-dates the cost-of-living crisis, it is particularly important as consumers face increasing pressures on their household finances.
“Even before the crisis, consumers were being asked to make an increasing number of complex and important decisions in a faster and increasingly complex environment,” it said.
“But the crisis underlines the need for high standards and strong protections. It is more important than ever that consumers can make informed, effective decisions, act in their interests and pursue their financial objectives.”
Firms will have an additional three months to implement the new consumer duty rules.
The FCA previously said there would be an implementation date of April 30, 2023 but many firms complained this would not be enough time.
Following this, the regulator 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.
sonia.rach@ft.com
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