In February 2023, the FCA issued two Dear CEO letters to debt advice firms and separately to firms in the debt purchasing, debt collecting and debt administration services sectors, to help them implement and embed the Consumer Duty Regulation effectively.
The letter sets out:
• A reminder of the implementation timeline, the key elements of the Duty and how it applies to firms in these sectors,
• The FCA’s expectations on how firms in these sectors should embed the Duty, including examples of good and poor practice,
• Feedback from a recent review of firms’ implementation plans, and
• The FCA’s approach to supervising the Duty in these sectors and its planned next steps.
The FCA has identified three key areas where firms in this sector should particularly focus their attention during the second half of the implementation period, running until to 31 July 2023:
• Effective prioritisation: The FCA has seen some plans where it was not clear what the basis was for prioritising some implementation work ahead of other aspects. Firms should make sure they are prioritising appropriately, focusing on reducing the risk of poor consumer outcomes and assessing where they are likely to be furthest away from the requirements of the Duty.
• Embedding the substantive requirements: The FCA has seen some plans that suggested firms may have considered the requirements superficially or are over-confident that their existing policies and processes will be adequate. It is asking firms to carefully consider the substantive requirements of the Duty so that when they are reviewing their products and services, communications and customer journeys, they identify and make the changes needed to meet the new standards.
• Working with other firms: To implement the Duty on time, many firms need to work and share information with other firms in the distribution chain. Some firms may need to accelerate their work on this important aspect of implementation.
As part of this work, the FCA is developing a strategy for debt firms to embed the Consumer Duty Regulation in its supervision work and tackle key harms, as well as metrics to measure the impact of the Duty on these firms.
Debt firms of all sizes in the sector should be prepared to discuss the Consumer Duty Regulation with the FCA and to provide information on the reviews and assessments they have conducted.
The FCA is working with an external research agency that will soon be sending an anonymised short survey to a sample of debt advice firms. This survey will help it to understand the progress firms are making in implementing the Duty and will inform its communications with firms.
Thistle Initiatives has supported debt sector firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting you as-and-when, our team of specialists can serve as your right hand in meeting and complying with regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.
Are you looking for help with your debt advice, debt purchasing, debt collecting or debt administration arrangements, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or sending an email to info@thistleinitiatives.co.uk.