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Dear CEO/Director | Release Date: 3rd February 2023

To read a shorter summary of this Dear CEO/Director letter, click here.

To access the original FCA document, click here.

Long Summary

The Financial Conduct Authority (FCA) has issued a guidance letter to firms in the mortgage lending and administration sector regarding the implementation of the Consumer Duty. This new regulation marks a significant shift towards a more outcomes-focused approach in consumer protection, demanding higher standards of care from firms.

Implementation Timeline

The FCA outlined a specific timeline for the implementation of the Consumer Duty:

By the end of October 2022, firms should have finalised their implementation plans.

By the end of April 2023, all necessary reviews to meet the outcome rules must be completed.

The Duty becomes effective on 31 July 2023 for all new and existing products and services open for sale or renewal.

By 31 July 2024, the Duty will apply to all closed products or services.

Application of the Consumer Duty

The Consumer Duty applies not only to direct interactions with retail customers but also throughout the distribution chain, which includes the design, provision, sale, and management of products or services. It aims to ensure that all firms involved can influence or determine customer outcomes to meet the new standards of care.

Key Requirements of the Consumer Duty

The FCA’s Finalised Guidance highlights several core areas:

Products and Services: Should meet the needs and objectives of specified target markets.

Price and Value: Must offer fair value by balancing price and consumer benefit.

Consumer Understanding: Firms are expected to aid consumers in making informed decisions through clear communication.

Consumer Support: Needs to be consistent throughout the product or service lifecycle.

A crucial element of the Duty is for firms to effectively monitor and evidence the outcomes their customers experience and take corrective actions where necessary.

FCA’s Expectations for Embedding the Consumer Duty

Firms are urged to:

Feedback from Implementation Plan Reviews

The FCA provided feedback from their review, noting that while many firms have embraced the new focus on consumer outcomes and established comprehensive plans, some are lagging behind. The FCA highlighted the need for:

Key Actions and Takeaways

Firms should:


The FCA emphasises that the successful implementation of the Consumer Duty by July 2023 is crucial, particularly in light of the current economic challenges impacting consumers. Mortgage lenders and administrators are encouraged to take proactive steps to ensure compliance, prioritise customer outcomes, and maintain open communication with the FCA regarding their progress. This approach is not only a regulatory requirement but also a strategic business imperative to enhance consumer trust and market integrity.

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