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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 specifically targeted at the Mortgage Lenders and Administrators sector, emphasising the implementation of the Consumer Duty. This initiative marks a significant shift towards a more outcomes-focused approach in consumer protection, aiming to enhance the standard of care that firms provide to their customers.

Key elements of the directive include a timeline for implementation, with the Duty becoming enforceable from July 31, 2023, for new and existing products and services, and from July 31, 2024, for closed products or services. The FCA’s guidance underscores the need for firms to integrate the Duty into their core operations and ensure that customer interests are deeply embedded in their business strategies and cultural practices.

The letter also provides feedback from recent reviews of firms’ implementation plans, noting both commendable practices and areas needing improvement. It particularly stresses the importance of effective prioritisation in addressing risks that might prevent firms from meeting the new standards. Additionally, the FCA points out the need for rigorous and balanced analysis in assessing the fair value of products and services offered to consumers.

For mortgage lenders and administrators, the FCA sets expectations for supporting customers in financial difficulty and ensuring fair value in pricing and service delivery. The guidance also calls for a comprehensive approach to data management to monitor and verify the outcomes experienced by customers, ensuring they align with the Duty’s objectives.

In conclusion, the FCA expects mortgage lenders and administrators to critically assess and, if necessary, recalibrate their operations to meet the heightened standards. Firms are urged to focus on delivering good outcomes for customers, particularly in light of current economic challenges such as the cost-of-living crisis. The overarching message is clear: compliance with the Consumer Duty is paramount, and the FCA will actively supervise firms to ensure adherence to these new regulatory expectations.

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