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Summary 

In January 2024, the FCA held a webinar on the Consumer Duty – Next Steps. A transcript of this webinar is available at here. 

During the webinar, Nisha Arora, the FCA’s Director of Cross Cutting Policy and Strategy, made a number of remarks that may be useful to firms occupied with implementing the Consumer Duty’s many requirements and that covered what the FCA wants firms to focus on in the coming months and also what it will be focusing on in the coming months.

Nisha commented that the early signs of change are positive. The FCA has seen firms developing new data to measure and monitor the outcomes they are delivering for consumers and has seen firms overhauling their product suitability assessments to make sure that the right products reach the right customers. It has seen firms reviewing their communications by making changes to the form and presentation of content to improve their clarity and boost consumer understanding. Nisha continues to underline the point that the Duty is not a ‘once and done’ exercise and that firms need to continue to focus on consumer outcomes, challenging themselves on whether the implementation exercises that they have done have delivered what is needed and to keep reviewing those on an ongoing basis. They also need to focus on how they are monitoring and measuring consumer outcomes, again on an ongoing basis, and using the necessary data.

There are also two areas that the FCA expects firms to focus on in particular in the coming months – that is the closed products work and the annual Board report, both of which need to be completed by 31^st July 2024.

The key FCA message to firms on closed products is to make sure they are on track to meet the 31^st July 2024 deadline. Firms might want to consider whether the product was closed for a particular reason that might have a bearing on consumer outcomes. For example, was it closed because it did not offer fair value or because the firm had complaints that might indicate harm or poor outcomes? There are some differences of approach with closed products; as they are not on sale to new customers, firms do not need to identify a target market and do not need to develop a distribution strategy. But that does not mean the Duty is any less important for closed products; it applies fully and firms still need to do a thorough and ongoing assessment to ensure closed products deliver the right outcomes and meet the requirements of the Duty, including the cross-cutting rules. It is emphasised that the FCA is taking closed product implementation seriously and firms must do likewise.

At least once a year, the firm’s Board or equivalent governing body must review and approve an assessment of whether firms are delivering good outcomes for their customers. The FCA considers that this is an important piece of internal governance and that Boards have a critical role to play in setting the strategy and ensuring that their organisation is delivering the Duty and the right consumer outcomes as part of that strategy. The FCA wants to see Boards working with their Executives, challenging them and driving them in the right direction to deliver and embed the Duty.

Links: https://www.thistleinitiatives.co.uk/blog/fca-webinar-consumer-duty-the-next-steps