Critical next steps in preparing for consumer duty

  • Describe some of the imminent challenges facing advisers and the consumer duty
  • Identify some key dates in the lead up to implementation
  • Explain the challenges over charges

All distributors of investment products should engage as early as possible with manufacturers and others in the chain. Distributors will wish to consider the extent of contractual protections that can be obtained from others in the chain in this regard.

There is some comfort for distributors, however, in that manufacturers have an earlier obligation to review their arrangements so as to be in a position to share relevant information with distributors by April 2023, to provide enough time for distributors to include this within their own assessments and processes, and comply with the rules applicable to them by July next year.

Article continues after advert

Board, governance and culture

Firstly, the FCA has made clear that it expects firms to have a champion at board level (ideally a non-executive director) who, along with the chair and chief executive, ensures that the consumer duty is being discussed regularly and raised in all relevant discussions.

This is important not only to ensure momentum against the key interim milestones in the run up to implementation are met, but also so that firms can demonstrate to the FCA how they are overseeing implementation in practice.

More broadly, the FCA has recognised that the benefits of the consumer duty will only be delivered by firms that make lasting changes to their culture, behaviours and processes and this needs to be driven from the top with strong senior championing and oversight from boards.

In line with this same governance theme, boards will be required to consider and sign-off a report annually on whether the firm has complied with the consumer duty.

It is likely the FCA will ask firms to provide copies of this report as part of its ongoing supervisory work, along with other management information and reporting that demonstrates the outcomes are being delivered to retail customers.

At an individual level, senior managers will be accountable for delivering good consumer outcomes within their areas of responsibility, in line with the senior managers’ regime’s duty of responsibility and conduct rules – including new conduct rule six, which mirrors the new consumer principle.

It will be important for firms to clearly define what these requirements look like in practice and ensure senior managers and relevant certified staff are trained on their obligations in this regard.


The rules and guidance the FCA is introducing will come into force in a phased basis.

For new and existing products or services that are open to sale or renewal, the rules come into force on July 31 2023. For closed products or services, the rules come into force on July 31 2024.

Given the FCA’s proposed implementation dates, this means that all across the sector firms will quickly need to get to grips with these final rules and accompanying guidance in order to meet the FCA’s implementation deadline.