Your complete guide to the FCA's Business Plan 2023/24
The wait is over, after over a year of debate, speculation and rumours from all corners of the
The wait is over, after over a year of debate, speculation and rumours from all corners of the industry, the regulator has now set out the formal set of rules for its long-touted Consumer Duty legislation.
First formally proposed in May 2021, the Consumer Duty, as published on 27 July 2022, effectively supersedes the previous Treating Customers Fairly (TCF) framework with a more dynamic and proactive approach to regulation – described by the FCA as ‘assertive supervision’.
The FCA states:
— Financial Conduct Authority“
Our rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.”
The newly introduced rules and outcomes focus on four key areas: products and services, price and value, customer understanding, and customer support – bringing customers to the forefront of everything financial services firms do.
So what are the new rules?
TCC and Recordsure’s CEO, Joe Norburn, comments:
‘The Consumer Duty is the most transformative regulatory shift we’ve seen from the regulator over the past decade – and the focus on better customer treatment will be welcomed by the consumer.’
The FCA’s clarity on their expectations and firms’ focus on customers’ needs is expected to pay the way to more flexibility for firms to compete and innovate in the interests of consumers.
FCA introduces challenging deadlines
Placing emphasis on accountability and transparency, the move is intended to put the consumers’ best interests at the heart of every decision that is made within financial services – and fundamentally improve how firms serve consumers. And crucially, the guidance redefines firms’ obligations towards customers to recognise the growing number of risks posed by our increasingly digitised marketplace.
Hence fast action is required.
Along with the launch of the new Customer Duty rules, the FCA announced very challenging timescales; here are the key dates for the financial industry:
– 31 October 2022: Boards (or an equivalent management body) are required to have an implementation plan
– 31 July 2023: new Consumer Duty rules come into force for new and existing products or services open to sales or renewals
– 31 July 2024: rules come to force for closed products and services
David Boyhan, TCC’s Technical Director comments:
‘With the challenging deadlines, the financial industry has been put under pressure to deliver the implementation plans this October and follow through to the Consumer Duty implementation deadline of July 2023.’
As previously promoted, the FCA is keen for firms to implement the new regulations as quickly as possible, and the rules will come to force at the end of July 2023 – a year away.
Yet a new deadline of 31 October 2022, announced today, is already looming with firms being required to have implementation plans in place – so as of this morning, the development of a compliance framework that’s fit for purpose has immediately become the top priority for business leaders.
TCC’s David Boyhan adds:
‘The good news for firms is that consultancy specialists, such as TCC, are already geared up to help them achieve the challenging deadlines of the implementation planning, oversight and delivery.’
A quick Consumer Duty recap
Setting the bar for consumer care higher than the existing Principle 6 and 7 of the FCA handbook, an overarching Consumer Principle underpins the legislation: ‘A firm must act to deliver good outcomes for retail customers.’
The Duty – as stated by the FCA – will include requirements for firms to:
The final component of the Consumer Duty comprises four outcomes that firms must consistently strive to deliver:
Now’s the time for action
Whether your firm began planning at first notice or elected to await further instruction before embarking on such a major strategy realignment, with the final rules upon us, there’s no more time to wait: implementation starts now.
Your first port of call should be to map out how the Consumer Duty’s aims and conduct requirements will make sense with your own products and services. At the same time, it’s critical to begin preparing for the switch to a more outcomes-focused model of supervision – including assessing how your current outcomes testing and complaints handling processes can be retooled to fit the Cross-Cutting Rules and Four Outcomes.
And beyond that, the sheer scope of the new legislation means your entire product lifecycle will likely need an honest review. This means asking some fundamental questions, such as:
Don’t leave it to trial and error
Whatever stage of planning you’re currently working on, it’s clear that ensuring a smooth transition will require considerable time, attention and resource from even the most well-prepared team.
But with TCC’s independent implementation support, we’ll be behind you every step of the way – offering valuable insight from our seasoned team of former regulators and senior consultants – and help you achieve the critical deliveries.
Our subject matter experts can provide an impartial, detailed health check of your approach to root out any inefficiencies or blind spots that prevent you from operating a well-oiled machine from day one – whilst ensuring your processes are flexible and robust enough to adapt to future regulatory directives.
What’s more, we are well versed in implementation planning, delivery and oversight, providing you with a springboard for the successful delivery of the Consumer Duty.
Whether you need additional expertise and resource to implement the Consumer Duty changes, or you just need independent assurance that your approach is built to last – we can help you. Speak to our regulatory change experts today.