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A plan that has been ongoing for the last couple of years. The FCA has been working on new Consumer Duty regulations with the specific intention of creating higher standards in the industry.

ensure a higher and more consistent standard of consumer protection for users of financial services, and prevent harm before it happens.

What is the Consumer Duty?

A new piece of regulation that intends to increase, significantly, the expectations of firms around the standard of care given to retail consumers right across the financial services industry.

The aim is to ensure existing best practices around good client outcomes are applied consistently across the industry. That might sound like an obvious goal, but good client outcomes are surely something the industry already strives for right? True. Although most if not all firms should already be meeting the new Consumer Duty requirements, there is always room for improvement.

The expectations of firms are going to be higher than ever and the industry as a whole will be expected to be consistent in delivering the outcomes of this new regulation.

What are the expectations?

If Consumer Duty aims to improve how firms service consumers, how will that work? The changes are significant, but we can look at this from a high level. See the chart below. The requirements are significant so I will keep this as brief as possible.

High Level Overview of The Consumer Duty

1. The purpose of the consumer principle is to elevate the existing TCF Framework.
2. Three cross-cutting rules underpin the need for key controls, who manages them, where they are reported, evidencing how they are monitored, identifying gaps and agreeing on actions required to close gaps.
3. There are four key outcomes, these are supported by a framework with guidance. Each set out in detail the regulator's expectations of the firm's behaviour in each of the four outcomes.

If you are interested in the detail behind all of this, the FCA has produced a site with all of the information you need.

Timeline

All affected firms are expected to be in the final stages of meeting the new regulation. The FCA has provided firms with guidance and a suite of rules to support firms.

Firms have until the 31st of October 2022 to draft their implementation plans which evidence they have scrutinized and challenged their plans to ensure it is as robust as it is deliverable. Firms should be prepared for spot checks from the FCA.

Plans are not expected to be perfect by the end of October, however, gaps need to be identified and sufficient time must be allocated to meet the launch date of July 2023 for open products/services and July 2024 for closed products/services.