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 retail banks and building societies, outlining the implementation of the Consumer Duty. This new regulation demands a shift towards an outcomes-focused approach in consumer protection, placing higher expectations on the standard of care provided by financial institutions. The letter specifies an implementation timeline, with the Duty taking effect on 31 July 2023 for new and existing products and services, and on 31 July 2024 for closed products or services.
The Duty aims to ensure that retail banks and building societies act in good faith, prevent foreseeable harm, and support consumers in achieving their financial objectives. It covers a wide range of activities from product design and pricing to customer interaction and support, emphasising fair value and clear communication to facilitate informed decision-making by consumers.
Specifically, the FCA stresses the importance of integrating the Duty into the corporate culture and decision-making processes, urging senior management to prioritise its implementation and to consider the diverse needs of their customers, including those with vulnerabilities. Retail banks and building societies are also expected to reassess their service delivery models, particularly in response to the ongoing cost-of-living crisis, ensuring that they continue to provide fair value and robust customer support.
The key takeaways for affected institutions are to fully integrate the Consumer Duty into their operational and strategic frameworks, ensure compliance by the set deadlines, and prepare for regular FCA assessments. Banks and building societies must focus on enhancing customer outcomes and aligning their business practices with the heightened standards set by the new regulation.