Legal development

The FCA takes aim at Consumer Duty implementation plans

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    With six months to go before the Consumer Duty comes into force, the FCA has published its review on how firms are planning to implement the Duty and highlighted areas of focus for firms.

    The review found that although many firms were able to show that they understand and embrace the shift towards delivering good customer outcomes and have established extensive programmes of work to properly comply with ithe Duty, some firms are lacking in their planning, so there is a risk that they may struggle to apply the Duty effectively once the rules come into force (on 31 July). A detailed briefing on the FCA's review can be found here.

    When issuing its final rules for the Duty, the FCA emphasised that its enforcement powers would be a crucial strategic tool to ensure the Duty is successfully embedded by firms and cautioned: "Where we identify serious misconduct by firms against the Duty, we will use our full range of powers to tackle it…This could include issuing fines against firms" (FCA Policy Statement PS 22/9).

    From an enforcement perspective, the FCA’s initial attention is likely to be on firms that were unable to apply the Duty effectively due to shortcomings in their implementation projects (for example, due to governance and oversight failings). In such cases, there will be an elevated risk of enforcement action. We have seen the FCA take this approach previously in relation to high profile regulatory change projects (for example, the implementation by firms of MAR surveillance requirements).

    In that context, the findings of this review are a clear warning shot. Firms, senior management and boards should review the FCA's feedback and ensure that their implementation projects are on track to deliver in line with the FCA’s key expectations.

    AuthorsAdam Jamieson and Aneesa Khan