The latest FCA Consumer Duty messaging (frogs and all)

Sheldon Mills is talking about frogs again.  Small mercies, though: in this latest speech (at an FCA hybrid event on 31 July 2024) he was talking about frogs as a "symbol of new life and resurrection".  Last February he was talking about eating them.

His headline metaphor: as the striped rocket frog can leap over 20 times its height, so too Sheldon has faith that UK financial services can "take the leap to the heights of full implementation of the Consumer Duty".

You mean it hasn't yet?

This FCA event was (not accidentally) held on the day marking the implementation deadline for closed products.  But it's clear that all concerned recognised that implementation work continues and is iterative.

Even FCA enforcement co-head Therese Chambers was stressing that FCA enforcement is taking "a proportionate approach" recognising that the Consumer Duty is a "very significant shift for firms".  It's not about reaching for "the big stick".  Instead it's about the FCA 'collaborating', 'educating', 'discussing' (and even 'illuminating').

Herd mentality

Therese told us the type of thing that "might make my ears twitch".  

And it's all about outliers.  

Where a firm or a cluster of firms are clear outliers in the way they are operating, the FCA will want to understand the reasons for this.  And if there weren't "fantastic" reasons, then the FCA would expect firms to respond constructively to FCA feedback.

And if the firm doesn't?  Then, says Therese, "I might be knocking on your door".

Two top tips, then.  First, document and record-keep - especially around your internal decision-making and especially when you're making product design, distribution, communications and support decisions that are atypical amongst peers.  And second: if you foresee a risk of regulatory escalation, devote resources early on to head off those troubles at the pass - however is most appropriate.

Value, value, value

Much of the webinar repeated messages the FCA has already sent.  Search "Consumer Duty Linklaters" and you'll find all our insights on those.

But it's fair to say that value was a real focus.  Here, lots of speakers - Sheldon Mills, FOS Chief Executive Abby Thomas and FCA Director of Competition Graeme Reynolds - repeated the point that fair value isn't just about the sticker price.  It's about customer understanding and customer service too.  It's a package deal.  

In Consumer Duty terms: don't implement each of the four outcomes on their own; they are overlapping and mutually reinforcing, so take a "holistic" approach.

A way forward

The FCA in the coming weeks will publish a grid of its forward programme of Consumer Duty work.  (I'd be flattered if it looks something like the grid of FCA Consumer Duty work that we presented in our "over the horizon" Consumer Duty webinar last month…)

In the meantime, on FCA retail regulatory reform, FCA speakers recognised that some firms want more streamlined regulations affording them flexibility and removing impediments to innovation, whilst other firms want more prescription so they know precisely where they stand when it comes to compliance.  The FCA is welcoming views from industry on its recent Call for Input into consolidating its retail conduct rules and guidance where the Consumer Duty may be duplicative.

The consultation closes on 31 October 2024.  So jump to it.  Sorry, couldn't resist.