Now that the FCA has published its policy statement and final rules and guidance to implement Consumer Duty (Policy Statement 22/9 and Final Guidance 22/5), understanding the revised timescales for compliance is essential.
The fundamental elements of the FCA’s proposals have not changed from those set out in its consultation paper CP21/13 in December 2021, though there are some welcome points of clarification, beyond the scope of this article on timescales. Implementation has been extended and is being phased, so that from end July 2023 the Consumer Duty applies to all new products and services and all existing products and services. Additionally, from end July 2024 Consumer Duty applies to all closed products and services.
Though the FCA has, on the face of it, given an additional three months beyond what was suggested at consultation for implementation for new and open products and services, the FCA has set milestones it requires firms to meet including the monitoring of progress.
Most importantly, by the end of October 2022 businesses need to have agreed their implementation plans and be able to evidence these. Firms need to be prepared should the FCA require them to share these plans and be challenged on their contents.
Manufacturers are obliged by the end of April 2023 to have ready the information necessary for distributors to meet their obligations under Consumer Duty (such as regarding price and value) and must have identified where changes need to be made to existing open products and services, in advance of full implementation by the end July 2023. Additionally, manufacturers are obliged to notify the FCA if as part of their implementation of Consumer Duty they are considering withdrawing or restricting access to products or services. Similarly, firms should alert the FCA if they may not be compliant before the implementation deadlines. Given the extensive nature of this for some providers, firms may need to take a risk-based approach, prioritising implementation work that is likely to have the most significant impact on consumer outcomes.
Ultimately, whilst many firms may well be delivering on many of the individual components already, it is essential that this is well defined, demonstrated and documented to fully meet the new Consumer Duty.
You can read the full statement and guidance from the FCA here - PS22/9: A new Consumer Duty | FCA.
Author
David Denton
Technical Consultant & Chartered Financial PlannerDavid’s primary role is to collate, simplify, regularly update and share technical knowledge, in a user friendly and practical way, within the Quilter group and with the adviser community. This is to assist with maximising financial planning post-tax investment returns given the complexity and fast changing legislation impacting wealth management.