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 “Dear CEO” letter to firms in the General Insurance (GI) and Pure Protection (PP) sectors regarding the implementation of the Consumer Duty. This new regulation marks a significant shift towards an outcomes-focused approach in consumer protection, significantly elevating the standards of care that firms are expected to provide to their customers.
The letter outlines the implementation timeline for the Consumer Duty, which includes crucial deadlines: firms must align their operations to the Duty by 31 July 2023 for new and existing products or services, and by 31 July 2024 for products or services that are closed to new business. The guidance stresses the importance of this duty amidst the ongoing cost of living crisis, highlighting the need for robust consumer protections.
Firms in the GI and PP sectors are urged to integrate the Duty into their business models, focusing on delivering good customer outcomes as a core aspect of their business strategies. The FCA’s finalised guidance provides comprehensive details on the expectations, including the necessity for products and services to offer fair value, clear consumer communication that enhances understanding, and consistent consumer support.
Additionally, the letter provides feedback from recent reviews of firms’ implementation plans, noting that while some firms have embraced these changes, others may be lagging behind. The FCA emphasises the need for effective prioritisation, embedding substantive requirements, and enhancing cooperation within distribution chains.
Key actions for firms include reassessing product governance frameworks to ensure they align with the Duty’s requirements and focusing on improving communication and claims processes to ensure they are customer-centric. Firms must also be prepared for rigorous FCA supervision aimed at enforcing these standards. The overarching message is clear: firms must act swiftly and decisively to embed these changes by the stipulated deadlines to ensure compliance and to foster trust and fairness in their consumer dealings.