In October 2022, in an update intended to help firms implement the Consumer Duty, the FCA explained more on three areas of the Duty that it has been receiving firm queries on and which are relevant for the wider market.
The October 2022 deadline
In its Final Guidance FG22/5, the FCA stated that firms’ Boards (or equivalent management body) should have agreed on their implementation plans by the end of October 2022 and be able to show they have scrutinised and challenged these plans to ensure they are deliverable and robust to meet the new standards. It also said that firms should expect to be asked to share implementation plans, Board papers, and minutes with supervisors and to be challenged on their contents.
The October deadline reflects that firms will need clear plans in order to implement the Duty properly and on time. The FCA does not expect firms to have necessarily fully scoped all work required to embed the Duty by the October deadline, but it does expect firms to have set out how they will do so in time to ensure timely implementation. Firms’ plans should, by the end of October deadline, be sufficiently developed to provide both firms’ governing bodies and the FCA with the assurance that the expectations set out in the Duty have been carefully considered and will be implemented for new and existing products by 31 July 2023.
Firms should also consider any work needed with other parties to prepare for the Duty and ensure their plan allows enough time for this.
Consumer Duty Board champions
In FG22/5, the FCA also stated that it expects firms to have a champion at Board (or equivalent governing body) level. This champion should be an Independent Non-Executive Director, where possible. For larger organisations with group structures, this champion should be at an appropriate Board level to ensure that the Duty is discussed in a meaningful way.
The primary role of the Board champion is to support the Chair and CEO in ensuring that the Duty is being raised regularly in all relevant discussions and that the Board is challenging the firm’s governing body/management on how it is embedding the Duty and focusing on consumer outcomes.
This is not a prescribed responsibility under the Senior Managers & Certification Regime. The FCA has not been prescriptive about this role and firms can set it up in a way that fits with existing roles and responsibilities on their Boards.
Definition of closed products
The Duty comes into effect on 31 July 2023 for new and existing products or services that are open for sale or renewal and on 31 July 2024 for closed products or services.
Closed products are those that are no longer marketed or distributed to retail customers or open to renewal.
Where existing customers can continue to make payments under the existing product terms this would still be considered to be closed, as long as the product or service is not open to new customers. It is up to firms to consider each product and determine whether is closed.
If you’d like to know more about how we can help you with your Consumer Duty arrangements, or any other regulatory compliance issues, our specialist team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.