On 20 February 2024, Sheldon Mills, FCA Executive Director of Consumers and Competition delivered a speech on the progress of the Consumer Duty since it came into force just over half a year ago. The speech identified the progress firms have made in these six months, whilst also identifying some challenges and looking ahead to the deadline for closed products, which is at the end of July 2024. Mr Mills also went on to outline areas where firms can improve their approach.

In terms of progress, Mr Mills noted that many firms have already made great progress on the Duty – for example, they are offering the right products and services to the right customers, eradicating jargon and moving clients to less bespoke and cheaper options where that is a better fit. The FCA has seen board-level leaders giving serious consideration to what the Duty means for them culturally and operationally, and it has also seen some firms offering fairer value by increasing value received by savers, reducing fees and maximising benefits to customers. Mr Mills referred to the FCA’s publication of the results from a survey of smaller firms, looking at their progress on implementation, and noted that the regulator was pleased to see significant progress since the last time small firms were surveyed.

However, he also noted that there is still much room for improvement and referred to the FCA’s report on good and bad practice. For example:

  • The FCA does not want to see firms waiting to see whether it will intervene to address an issue.
  • Firms need to “get serious” about their data and not assume they can just repackage existing information.
  • The Duty should be embedded across every firm at every level, with leadership from boards.

In relation to price and value, Mr Mills warned that board reports will come under greater scrutiny from the FCA as it looks to these to evidence the steps firms are taking to drive good outcomes.  

With the closed products approaching, Mr Mills highlighted and discussed the main challenges firms have identified around closed products, which include: 

  • Being able to evidence firms are delivering good outcomes for consumers, and addressing gaps in the customer data firms hold. 
  • Determining fair value on closed products. 
  • Taking action relating to less engaged and ‘gone away’ customers, including the support offered and how firms assess whether these customers understand the products they hold. 
  • Ensuring that the design of firms’ products and services deliver good consumer outcomes over the long haul, even where a firm has vested rights. 

Mr Mills emphasised that firms should by now have a clear roadmap to comply with the Duty by the 31 July 2024 deadline for closed products, at which point all products will be in scope of the Duty. Firms should have reflected on what lessons they learned in the run up to the first deadline, filled in the gaps on open products, and made sure closed products will comply by the deadline. Where firms are considering withdrawing closed products, they are reminded to consider the impact this will have on consumer outcomes and make sure they are not causing foreseeable harm. The FCA expects sectors that will be impacted more by the closed products and services deadline include life insurance, funeral plans, consumer investments, consumer finance and retail banking. 

Mr Mills stated that in supervising and enforcing the Duty, the FCA will be “informed by data and metrics” as to where it prioritises its focus. The FCA expects firms to take a risk-based approach to prioritisation, assessing which products or services are likely to cause the most harm and where the most work is needed. Mr Mills reminds firms that their board report will be key to this, as it will be used to assess and evidence how firms have provided good outcomes for consumers under the Duty. The first one will be due by the end of July.