On 29 September 2022, the FCA published a speech by Sheldon Mills (FCA Executive Director, Consumers and Competition) entitled What firms and customers can expect from the Consumer Duty and other regulatory reforms.
Key points in the speech include:
- The Consumer Duty will be a significant shift in what the FCA expects of firms. It means making lasting changes to culture and behaviour to consistently deliver good outcomes.
- In terms of price and value, the FCA expects consumers to receive fair value. The regulator’s intention is not to set prices and the rules do not have this effect. But the FCA expects firms to satisfy themselves that the prices they charge are reasonable for the benefits. For example, a firm lending to customers with high credit risks would need to satisfy themselves that any high charges have a reasonable relationship with the benefits for the customer.
- Boards and senior management have a critical role in overseeing firms’ implementation of the Consumer Duty. That is why the FCA has strengthened the requirements around governance and accountability to ensure senior managers and executives are held accountable.
- The FCA does not expect firms to have necessarily fully scoped all work required to embed the Consumer Duty by the end of October deadline. However, firms plans’ should be sufficiently developed to provide their governing bodies and the FCA with assurance that the Consumer Duty will be fully implemented for new and existing products by next July.
- The FCA expects boards to have an ongoing role overseeing their firm’s plans and ensure they remain on track.
- The rising cost of living underlines the importance of outcomes the FCA would expect under the Consumer Duty.
- The FCA is conscious of upward pressures on mortgage rates and some products have been removed in the past week. It is monitoring developments closely and will be working with industry to ensure that consumers are treated fairly during this period.
- In relation to savers, the FCA expects banks to be transparent and be able to explain clearly to it how they decide on the pace at which they pass on base rate increases to savers for both easy access and fixed term deposits. The FCA is meeting with the major high street banks to ensure they are taking appropriate steps to help consumers.