Nisha Arora, the FCA's Director of Cross Cutting Policy and Strategy, has given a speech on next steps in relation to the Consumer Duty three months on from implementation.

The key message of the speech is that the Duty should not be seen as a “once and done event”. It is important that firms do not view the Duty as a compliance exercise but that it creates an enduring cultural shift. The Duty needs to become part of a firm's culture and how it does business, running across the whole organisation from board to front-line delivery, from product design to communications and customer support. 

Successful implementation

Firms who have met the FCA's expectations are described as having embraced the significant shift in culture and behaviour. The speech identifies some of the good practices the FCA has seen, including firms: 

  • simplifying language in the letters they send to customers and introducing more accessible formats to improve outcomes for vulnerable customers;
  • being more upfront on their websites about exclusions so it is easier for customers to understand whether a product meets their needs; and
  • reviewing their fees with fair value in mind.

Data again emerges as central to successful implementation, specifically the ability to identify the data needed to measure and monitor the delivery of the outcomes. By contrast, where firms are not meeting the FCA's expectations, the speech states that it is often because they are just repackaging existing data and have not thought seriously about what information they would need to really understand consumer outcomes. 

Looking ahead

The speech looks ahead to key actions for firms, including:

  • Reviewing implementation plans and checking changes have been made and whether they go far enough. 
  • Ensuring they do not delay the annual board report. Firms are reminded that this will take time to do well as it involves the board agreeing the actions required to address any identified risks or poor outcomes and whether any changes to future business strategy are required.
  • Staying on track for the implementation deadline for closed products and services (31 July 2024). Firms are expected to consider if closed products and services could lead to foreseeable harm or frustrate customers pursuing their financial objectives.

The FCA's approach

For its part, the FCA sees the Duty as an integral part of its approach and mindset at every stage of the regulatory life-cycle. This includes authorisations, policy development, supervision and enforcement. The FCA will continue its work across all sectors to test firms’ implementation and embedding of the Duty. While firms can expect robust action such as interventions or disciplinary sanctions where needed, the speech states that the FCA also wants to showcase where firms are doing well and share good practice examples. 

The FCA will also be hosting a webinar on 6 December 2023 to help firms understand the regulator's continuing expectations now the Duty is in force.