The rules and guidance stage has already passed and the next few months will be critical for implementation according to speakers at the event. But the conclusion was that Consumer Duty presents an opportunity to truly transform the financial services sector.
“The new Consumer Duty represents a major shift in regulation. For years the FCA worked with 11 key principles, and this adds a 12th,” said Chris Woolard, UK Fintech Leader, EY, and Former Interim CEO, FCA. “What happens over the next few months is critical to ensure there’s an active sense of compliance with what the FCA is trying to achieve with the new Duty that will be in place in July 2023.”
Woolard discussed three aims of the Duty:
- act in good faith towards retail customers;
- avoid foreseeable harm to retail customers;
- enable and support them to reach financial objectives.
And four pillars/outcomes:
- Governance of products and services.
- Pricing and fair value.
- Consumer support.
- Consumer understanding.
By the end of April 2023, manufacturers are expected to have completed all reviews necessary to meet the four outcome rules and share this information with product distributors. By the end of July 2023, firms should have implemented any remedies required to meet the duty for all existing and new products and services.
Speakers said the consumer lifecycle would be key, with a concentration on pipelines, not just the point of sale.
“The first big test for the Consumer Duty will be the cost of living crisis,” said Woolard. “I think the FCA is going to use the Consumer Duty as the major lens in which it runs through developments in the market.”
A major challenge ahead will be gathering data in the form of research and surveys, to look at the outcome for consumers.
Of those attending who answered the question ‘Do you feel you have enough time to make these changes prior to implementation in April 2023’-‘ 41% said yes, 19% said no, and 38% said no, but can introduce temporary fixes.
