Last Friday, the Financial Conduct Authority (FCA) issued a "Dear CEO" letter to a number of financial services sectors, including Mortgage Lenders, Retail Banks, Asset Management Firms and Building Societies.
In the letter, the regulator stated that it has been supporting financial services firms in their preparation for implementing the new Consumer Duty.
The letter sets out:
- A reminder of the implementation timeline, key elements of the Duty and how it applies to firms
- The FCA's expectations for how firms should embed the Duty, including relevant examples of good and poor practice
- Feedback from the FCA's recent review of firms’ implementation plans
- The regulator's approach to supervising the Duty and planned next steps
This comes only a week after Sheldon Mills, Executive Director of Consumers and Competition at the Financial Conduct Authority(FCA) published a review of how firms are progressing with their Consumer Duty Framework.
The regulator has created a programme of engagement, which includes setting out the expectations of the Consumer Duty and arranging a series of regional in-person events for specific groups of small- and medium-sized firms.
“Putting good outcomes for customers at the heart of firms’ strategies and business objectives will build trust and modernise how we regulate financial services."
The Consumer Duty is a cornerstone of the FCA’s three-year strategy as it is expected to help the regulator set and test higher standards, and reduce and prevent serious harm. Parliament has given the FCA a mandate to introduce the Duty through the Financial Services Act 2021.
The rules come into force on July 31, 2023, for new and existing products or services open to sale or renewal, and on July 31, 2024, for closed products or services.
Here's the FCA's full timeline toward full Consumer Duty Compliance:
