On 14 December 2023, the FCA published a summary of the findings from its review of retail banking firms’ implementation of the Consumer Duty, which came into force for current (on sale) products on 31 July 2023. The multi-firm review looked at actions firms had taken for customers in financial difficulty, dealing with bank accounts of deceased or incapacitated customers, fraud and security breaches, business current accounts and/or mortgages for debt consolidation.

The FCA had previously (in February 2023) written to banks, building societies, mortgage lenders and administrators to outline its expectations on implementing the Duty, ahead of the July 2023 deadline. As part of their work before the deadline, firms should have developed an approach to review all their products and services against the Duty’s higher standards to identify any gaps they need to address to ensure good customer outcomes. The FCA carried out its multi-firm review to understand how firms had approached these reviews, the information they used to inform their gap analysis and the actions they had taken or needed to take to deliver good outcomes for customers.

As well as setting out the findings of the review and examples of good practice, the FCA also outlines what it expects from firms. It flags that the Duty sets a higher standard of care that firms must provide to consumers in retail financial markets and plays a key role in underpinning the FCA’s expectations of firms.

What should firms be doing?

All firms are reminded that they should be focused on putting consumers at the heart of their business and delivering good outcomes.

In particular, firms should assure themselves that they are complying with:

  • The Consumer Principle, which requires firms to act to deliver good outcomes for retail customers.
  • The cross-cutting rules for firms to act in good faith towards retail customers, avoid causing foreseeable harm to retail customers, and enable and support retail customers to pursue their financial objectives.
  • The outcomes rules on the design of products and services, price and value, consumer understanding and consumer support.

Firms should also ensure they have the appropriate management information and can evidence the outcomes their customers are receiving.

Next steps

The FCA explains that, in addition to sector-focused work, it will be exploring how firms are meeting its expectations under the Duty for themes and issues across multiple sectors, and its findings from the review will feed into that cross-sector work. It will also continue to monitor how firms are meeting the higher standards the Duty expects and will engage with firms on their implementation plans for closed book products ahead of the 31 July 2024 deadline.

Firms are also reminded that their Board must, at least annually, review and approve an assessment of whether the firm is delivering good outcomes for its customers which are consistent with the Duty. Firms should expect the FCA to ask for the results of their monitoring and their Board reports, which will be used, along with the information that the FCA already gathers from firms and other sources of data, to assess them against the Duty and identify and tackle harmful practices.