The time has now come for the FCA to begin make good on its promise proactively to engage and give guidance and clarification as firms work to implement these new high-level rules in the specific contexts of their particular businesses.
Time is short: implementation plans are due by the end of October 2022 and the Consumer Duty applies to new and existing products from the end of July 2023.
These looming deadlines are sharpening minds, and the FCA is starting to receive queries from firms as a result.
Its first public step is to set up a webpage which it promises to keep updated with explanations on areas of the Consumer Duty in response to firms' queries. One for your browser favourites.
So far, the webpage offers three clarifications.
- The first, in essence, is that the initial Board-approved implementation plans need not contain a complete scoping of all implementation work. Instead, they can set out how firms will scope that work in time to ensure timely implementation. Essentially the FCA is looking for evidenced assurance that a firm has carefully considered the expectations set out in the Consumer Duty and that these will be implemented on time.
- The second is on Consumer Duty champions. Whilst the FCA envisages a Board-level INED appointee, the FCA has clarified that it is for firms to "apply judgment and set up the role in a way that is effective for their organisation", provided the appointee is sufficiently senior to ensure Board-level discussion. For example, the Chair or an Executive director could be appointed if that would work better. But the Consumer Duty champion role does not affect Boards' (and executives') collective responsibilities for Consumer Duty compliance.
- The third is about "closed" products or services (for which there is a more relaxed implementation deadline of 31 July 2024). Helpfully, these will include products that are closed to new customers but where existing customers can continue to make payments (e.g. a pension product closed to new customers but to which existing policyholders can still make contributions).
To help firms implement the Duty, we explain more on the areas of the Duty that we have been receiving firm queries on which are relevant for the wider market.