The FCA has published further information to assist firms which include common queries the FCA have received about the implementation of the Consumer Duty.
In FG22/5, the FCA set out its expectations for firms to have in place implementation plans which were approved by its Board (or equivalent management body) by the end of October 2022. The FCA expect that firms are able to show they have scrutinised and challenged these plans to ensure they are deliverable and robust to meet the new standards set out in the Consumer Duty. The FCA also indicated that firms should expect to be asked to share implementation plans, Board papers and minutes with supervisors and be challenged on their contents.
The FCA have provided further explanations on their expectation for firms to have this implementation plan in place. The FCA have stated that they do not expect firms to have necessarily fully scoped all work required to embed the Duty by the October deadline, but the regulator does expect firms to have set out how they will do so in time to ensure timely implementation. Firms’ plans should, by the October deadline, be sufficiently developed to provide both firms’ governing bodies and us with assurance that the expectations set out in the Duty have been carefully considered and will be implemented for new and existing products by 31 July 2023.
Firms should also consider any work needed with other parties to prepare for the Duty and ensure their plan allows enough time for this.
Consumer Duty Board champions
Firms should also ensure that they have appointed a ‘Consumer Duty Board Champion’. The primary role of the Board champion is to support their firm in ensuring that that;
- the Duty is being raised regularly in all relevant discussions, and;
- the Board is challenging the firm’s governing body/management on how it is embedding the Duty and focusing on consumer outcomes.
This is not a prescribed responsibility under the Senior Managers & Certification Regime (SM&CR).
The FCA clarified that whilst the regulator set out in FG22/5 in general they envisaged this individual to be an independent Non-Executive Director working with the Chair, the individual suitable for this role this will depend on the characteristics of the firm and its Board. For example, in some cases it may work well if the Chair of the Board is also the Board champion for the Duty.
This role does not affect the Board’s collective responsibility in relation to the Duty or alter the respective roles of the Board and the executive in ensuring compliance with the Duty under existing governance procedures. The Board champion is not an executive role and they are not responsible for the firm’s implementation of the Consumer Duty but for ensuring it is discussed at the Board.
The Duty comes into effect on 31 July 2023 for new and existing products or services that are open for sale or renewal and 31 July 2024 for closed products or services.