Dear CEO/Director | Release Date: 3rd March 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) is actively promoting the implementation of the Consumer Duty within the retail finance sector, aiming to enhance consumer protection through a more outcomes-focused approach. This letter outlines the timeline for adoption, key elements of the Duty, and specific expectations for retail finance providers.
Implementation Timeline Highlights:
- By the end of October 2022, firms’ boards should have approved their Consumer Duty implementation plans.
- By April 2023, manufacturers must complete all necessary reviews to meet the outcome rules.
- The Consumer Duty becomes enforceable from July 31, 2023, for all new and existing products or services, extending to closed products or services by July 31, 2024.
Duty Application to Retail Finance Providers:
The Duty applies to all firms influencing customer outcomes, not limited to those with direct customer relationships. Retail finance providers must ensure their products and services are specifically tailored to meet the needs of their target market.
Requirements and Expectations:
- Products and services must offer fair value and be designed to meet the specific needs and objectives of the target market.
- Communications should effectively support consumer understanding, helping them make informed decisions promptly.
- Continuous support must be provided to meet consumer needs throughout the lifecycle of the product or service.
Strategic Integration:
Firm leaders are expected to integrate consumer interests deeply into their business strategies and operational practices, ensuring these new standards are reflected in everyday business activities.
Monitoring and Adaptation:
- Firms must monitor consumer outcomes continually to identify and address any issues, ensuring compliance with the Duty’s standards.
- Feedback indicates while many firms are on track with implementation, some may be lagging, which highlights the need for all involved to fully integrate the requirements.
- This directive is part of the FCA’s broader strategy to ensure higher industry standards through enhanced consumer protections. The letter serves as a reminder and guideline for firms to align their operations with the Duty, ensuring that consumer interests are paramount in their business models.