Dear CEO/Director | Release Date: 3rd February 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) has issued guidance to Mainstream Consumer Credit Lenders (MCCL) regarding the implementation of the Consumer Duty, marking a significant shift towards more outcome-focused consumer protection. This new standard emphasises improved care and aims to embed consumer interests deeply into firms’ business strategies.
Key deadlines include finalising implementation plans by October 2022 and applying the Duty to all new and existing products by July 31, 2023. By July 31, 2024, the Duty will extend to closed products and services. The FCA expects firm leaders to ensure that the Duty is prioritised within their governance structures and integrated into all levels of strategic planning.
The directive covers essential aspects such as designing products that meet specific market needs, ensuring pricing strategies offer fair value, enhancing the clarity and supportiveness of communications to aid consumer decision-making, and providing robust customer support throughout product and service lifecycles.
Feedback from the FCA’s reviews suggests varying levels of readiness among firms, with some needing to accelerate their compliance activities. The FCA highlights the need for prioritisation in implementation, deeper integration of the Duty’s requirements, and enhanced collaboration within distribution chains.
Firms are urged to align operational and strategic frameworks rigorously with the Consumer Duty, evidencing compliance and preparing for ongoing FCA assessments. The overall focus is on strengthening consumer outcomes and ensuring firms meet the enhanced standards of consumer protection.