Some companies will “struggle” to implement the requirements of the new Consumer Duty by the deadline, and a lack of detailed planning, failure to prioritise, and a complacent approach need to be addressed. That’s the conclusion of an FCA analysis of 60 UK financial services groups.

The regulator stressed that “many firms show they understand and embrace the shift to delivering good customer outcomes” but expresses concern at the rate of progress and is urging a redoubling of efforts.

Sheldon Mills, FCA Executive Director of Consumers and Competition, said: “The Consumer Duty will bring about a step change in the way financial services firms treat their customers and we welcome the work firms are doing to implement it. Given the scale of the reform, we recognise that some firms need to make significant changes.

“For firms which are further behind in making the necessary changes, there is time to put that right and for them to show they are acting in the spirit of the new Duty. “

Triple focus

The FCA wants firms to focus on three things in the run-up to implementation;

• prioritising effectively on the areas that will make the biggest impact on outcomes for customers;
• making changes needed, clearly communicating them to customers, and explaining where customers can get the support they need;
• working closely with commercial partners to make sure they are all delivering good consumer outcomes.

The new rules come into force on 31 July 2023 for new and existing products, and 31 July 2024 for closed products or services, and will apply to around 60,000 firms. Cryptocurrency and buy-now-pay-later services are not covered.

None of the firms viewed as “struggling” have been named, but the FCA gave examples of plans to implement the new duty being implemented with no discussion, a lack of detail on how to create and promote an appropriate culture, no consideration of whether current culture was fit for purpose, and complacency in learning lessons from previous customer service initiatives.