Dear CEO/Director | Release Date: 6th April 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 dealing in Contracts For Difference (CFD), spread bets, or rolling spot forex, emphasising the integration of the Consumer Duty to enhance consumer protection. This Duty mandates a high standard of care and is focused on outcome-based consumer protection. It becomes enforceable from July 31, 2023, for new and existing products, extending to closed products by July 31, 2024.
The FCA highlights the importance of firms embedding customer interests into their operations and leadership roles, urging immediate action to align with the Consumer Duty requirements. The letter outlines a timeline that required firms to have their implementation plans by the end of October 2022 and to finalise all necessary reviews by the end of April 2023.
Key requirements of the Duty include designing products that meet customer needs, ensuring fair pricing, improving consumer understanding through effective communication, and providing ongoing support to consumers. The FCA expects firms to be proactive in preventing consumer harm and supporting customers in achieving their financial goals.
Feedback from the FCA’s review of firms’ plans indicates varying levels of readiness, with some firms needing to prioritise more effectively and engage more deeply with the requirements of the Duty. The FCA stresses that it will actively supervise compliance with the Duty and is prepared to take action against firms that fail to meet its standards.
Firms are urged to ensure they are prepared for the upcoming deadlines and to focus on delivering positive consumer outcomes, reflecting the Duty’s emphasis on good faith and prevention of foreseeable harm.