Dear CEO/Director | Release Date: 21st 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 payment firms such as Payment Institutions, Electronic Money Institutions, and Registered Account Information Service Providers to integrate the Consumer Duty, enhancing consumer protection standards. This initiative aims to instil higher customer-focused outcomes and trust in payment services, encouraging sustainable sector growth.
Implementation Timeline:
By October 2022: Firms should finalise implementation plans.
By April 2023: Complete necessary reviews to meet outcome rules.
July 31, 2023: Duty enforcement begins for new and existing products.
July 31, 2024: Enforcement extends to closed products or services.
Key Requirements:
- Design products to suit the target market’s needs.
- Ensure pricing offers fair value for the benefits received.
- Communication should enhance consumer understanding.
- Provide ongoing support tailored to consumer needs.
Strategic Implications:
Payment firms must deeply integrate consumer interests into their corporate culture and strategic objectives. This approach ensures that business practices are aligned with improving consumer outcomes, especially crucial during the economic strains of the cost-of-living crisis.
The FCA urges payment firms to rigorously align operational and strategic approaches with the Consumer Duty’s standards, prioritising consumer well-being through suitable products, fair pricing, clear communication, and robust support. This fosters a fairer, more transparent payment environment.