Dear CEO/Director | Release Date: 3rd March 2023

To read a longer summary of this Dear CEO/Director letter, click here.

To access the original FCA document, click here.

Short Summary

The Financial Conduct Authority (FCA) is emphasising the implementation of the Consumer Duty within the mortgage intermediaries sector, aiming to elevate consumer protection standards through an outcomes-focused approach. This letter outlines the timeline for adoption, the fundamental elements of the Duty, and specific expectations tailored for mortgage intermediaries.

Implementation Timeline Highlights:

By October 2022, firms should have established their Consumer Duty implementation plans.

By April 2023, all necessary reviews to meet the Duty’s outcome rules should be completed.

The Consumer Duty will be enforceable from July 31, 2023, for all new and ongoing products or services.

Duty Application to Mortgage Intermediaries:

Mortgage intermediaries are considered ‘manufacturers’ for their role in designing or operating a service, making them directly responsible for the design and distribution of their financial products.

The Duty mandates that products and services are crafted to fit the specific needs, characteristics, and financial goals of their target market.

Requirements and Expectations:

Mortgage intermediaries must ensure products and services offer fair value, balancing cost against the benefits provided.

Communications with consumers should be clear and supportive, enabling well-informed, timely decision-making.

Support services should adequately meet consumer needs throughout the product lifecycle.

Strategic Integration:

Firm leaders are expected to integrate consumer interests deeply into their business strategies and operational practices, ensuring these new standards are reflected in everyday business activities.

Ongoing Monitoring and Adaptation:

Firms must continuously monitor consumer outcomes to identify and rectify any issues, ensuring adherence to the Duty’s standards.

Feedback suggests that while many firms are on track with implementation, some are lagging, highlighting the need for all involved to fully grasp and integrate the requirements.

This directive is part of the FCA’s broader strategy to ensure higher industry standards through enhanced consumer protections. The letter serves as a reminder and guideline for firms to align their operations with the Duty, ensuring that consumer interests are paramount in their business models.