Following on from the FCA’s initial batch of portfolio letters on the Consumer Duty on 3 February, the FCA published a second batch on 21 February. These letters specifically address the implementation of the Consumer Duty to firms in the following portfolios: debt advice; debt purchasing, debt collecting and debt administration (DPCA) services; and payment services and e-money.

The letters set out:

  • A reminder of the implementation timeline, key elements of the Duty and how it applies to the relevant firms.
  • The FCA's expectations on how the relevant firms should embed the Duty, including examples of good and poor practice.
  • Feedback from the FCA’s recent review of firms’ implementation plans published on 25 January. 
  • The FCA’s approach to supervising the Duty in the relevant portfolios and planned next steps.

The DPCA letter and Debt Advice letter include annexes setting out the FCA’s expectations for the relevant firms to meet the requirements of the Consumer Duty, as well as issues arising from the cost of living, and provide an update on the FCA’s assessment of the key harms firms face regarding their customers and the market.

The payment services and e-money letter also includes annexes setting out how the Consumer Duty applies to firms in the portfolio, as well as some of the key aspects payments firms should be considering in seeking to consistently deliver good consumer outcomes under the Duty. The FCA adds that, in particular, payments firms need to consider their handling of alleged cases of fraud in light of the consumer support outcome. The FCA also refers to poor financial crime controls in some payments and e-money firms, for example a tendency for some firms to freeze a disproportionate number of accounts, for too long, and without adequate explanation.

Overall, the letters emphasise the centrality of the Consumer Duty as a crucial concern for firms, and the importance of embedding its underlying purpose into their culture. Especially in light of the cost of living crisis, firms should be seeking to ensure that they are prioritising good outcomes for customers; this should be central to their strategy and business objectives.

Copies of the letters can be found below: