FCA publishes verdict on firms' Consumer Duty implementation plans

The Financial Conduct Authority (FCA) has published its verdict on firms' Consumer Duty implementation plans, according to the Money and Mental Health Policy Institute, which reported on the review on 3 February 2023¹. The Consumer Duty sets standards of consumer protection across financial services¹.

The FCA expects firms to have a Consumer Duty champion at board level, and a firm's board, or equivalent governing body, should review and approve plans¹. In the review it found a lack of responsibility being taken at a senior level at some firms, including implementation plans approved without board level discussion and boards asking "just one question" before approving a plan¹.

The review covered the four key outcome areas: Products and Services, Price and Value, Consumer Understanding, and Consumer Support¹. The FCA perceived some firms as being complacent in assuming current internal frameworks for assessing these outcome areas would suffice to meet Duty requirements, and others lacked clarity around their communications strategy¹. On data, the FCA reported the impression that some firms assume they can "get by" by repackaging existing data to meet Duty requirements¹.

Examples of good practice highlighted in the review included developing mechanisms for customers to disclose additional needs or vulnerable circumstances, considering how to give customers information at the right time and in a form they can understand, and committing to provide information through the customer's channel of choice¹.

Why it matters for households

The Consumer Duty applies to firms across financial services, so the review concerns how banks, insurers and others are preparing to change the way they treat customers¹. The FCA's findings on senior level ownership mean that, at some firms, the plans governing how customers are treated were approved with limited board discussion¹. Where firms are judged complacent about their existing frameworks, or unclear on communications, the practical effect falls on how products are assessed and how information reaches customers¹. The review also covers how firms identify customers at risk through data, which the institute links to preventing foreseeable harm and to customers entering a debt spiral¹. The institute states that customers with mental health problems are at greater risk of poor outcomes¹.

What happens next

The FCA is about to write to firms to highlight its key expectations on implementing the Duty and some of the key risks and consumer harms it is concerned about¹. No date for that letter has been reported¹.

The Consumer Duty: what it means for you guide explains the standards firms must meet, and the Financial Conduct Authority: what it does for consumers page covers the regulator's role.