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Consumer Duty is a ‘watershed moment’, says FCA director
The Consumer Duty is a “watershed moment” that must be taken extremely seriously by firms offering investment services and financial advice, a senior director at the FCA has said.
Therese Chambers, FCA director of consumer investments, was speaking at PIMFA’s Consumer Duty Conference.
She told delegates: “The Consumer Duty is a watershed moment and a key priority for the FCA. We are looking for a fundamental change in firms’ approaches to ensure the best client outcomes, not just technical compliance.”
She warned firms they should not consider the Duty to be a “re-expression of Treating Customers Fairly (TCF).” Instead the purpose behind the Duty is to create a fundamental cultural change across firms that is led from the top and filters across the whole organisation, she told them.
Ms Chambers said: “Consumer Duty is a substantial uplift in consumer standards and rules from July 2023. It will require firms to document and evidence consumer outcomes, which the FCA hopes will help firms review and make further improvements for their clients in the future”.
As a consequence the FCA is looking for a more substantive approach from firms as they evidence and document their work for consumers.
Ms Chambers also added that the FCA had reviewed the implementation plans of several firms and suggested that some of those plans - particularly those of larger firms - were overly simplistic and optimistic about their ability to comply with Consumer Duty by the deadline.
She said firms needed to ensure they were setting effective priorities and looking to reduce risk and assessing where they were likely to be furthest away from good consumer outcomes, so they can “focus on where the biggest gaps are and try to fix them first”.
Another area where firms also needed to pay more attention to was in their data strategies and the need for system changes.
She said it had become clear from the FCA’s review of some firms’ implementation plans that they had not paid enough attention to the impact of third-party suppliers on consumer outcomes.
She added that the FCA was taking the Consumer Duty “very seriously as a regulator”, and that it is looking for “a fundamental change in behaviour” and for firms to continually review how to improve consumer outcomes in future as well.
“The Consumer Duty is central to the FCA's own innovation and part of their strategy to rebuild consumer trust and confidence over the next three years. We regard the Consumer Duty as the tool that will drive that change.”