On 10 May 2023, the FCA published a speech by its Executive Director of Consumers and Competition, Sheldon Mills, in which he discusses the countdown to the Consumer Duty.
Mr Mills begins by reminding firms that they have less than three months to implement the Consumer Duty, which comes into force on 31 July 2023. He warns that firms who ignore the Duty or who pose the most harm can expect swift action, and notes that the FCA’s supervisory and enforcement approach will be proportionate to the harm – or risk of harm – to consumers, with a sharp focus on outcomes. The FCA will prioritise the most serious breaches and act swiftly and assertively where it finds evidence of harm or risk of harm to consumers. Mr Mills further highlights that in some cases, firms can expect the FCA to take robust action, such as interventions or investigations, along with possible disciplinary sanctions.
In addition, the speech notes how the work carried out by firms to implement the Duty could boost the competitiveness of the financial sector, explaining that the Duty will help the UK financial services industry remain world-leading proponents of financial services, as firms have to think harder about innovating and competing to find better ways to serve customers. Furthermore, if applied correctly by firms, Mr Mills states that the Duty should help firms retain and attract customers and will enhance the competitiveness of the UK’s financial services sector.
Mr Mills goes on to note that, in order to further support firms, the FCA is sharing findings from its review of firms’ fair value assessment frameworks, which highlights good practice and areas for further consideration. The review found that firms had carefully considered the FCA’s price and value requirements, but that some firms have more work to do to meet the rules. The FCA has set out 4 key areas for firms to focus on which include collecting evidence that shows products represent fair value and having clear oversight of actions to take if products do not provide fair value.
The speech concludes by noting that there are 82 days remaining until the deadline for implementing the Duty and that firms who are not yet ready should take action now.