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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 a directive to firms in the Consumer Investments sector regarding the implementation of the Consumer Duty. This regulatory update aims to enhance consumer protection by introducing higher standards of care and an outcomes-focused approach.

The key timelines set by the FCA are:

The Consumer Duty requires firms to ensure that their products and services are designed to meet the specific needs and objectives of their target markets, provide fair value, enhance consumer understanding through effective communication, and support consumers throughout the product or service lifecycle. This duty is significant amid the financial pressures faced by consumers, highlighting the need for firms to facilitate informed and effective decisions by their customers.

Firms are expected to integrate the interests of customers into their strategic and operational frameworks. Senior management and boards are urged to prioritise this integration to ensure compliance by the specified deadlines. The FCA has also provided feedback from its review of firms’ implementation plans, identifying areas needing attention such as prioritisation, embedding substantive requirements, and cooperation in the distribution chain.

Key take-aways for affected firms include the urgent need to review and adapt their operational strategies to align with the Consumer Duty requirements, ensuring that consumer protection and outcome-focused approaches are deeply embedded in their business practices. Firms must act swiftly to meet the implementation timelines, with a clear focus on providing fair value and supporting consumer understanding and outcomes.

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