Sheldon Mills, the FCA’s executive director of competition and consumers, today warned Financial Planning and other financial firms that haven’t taken action that the Consumer Duty “will not go away”.
He said “the deadline of 31 July will not be moved.”
The regulator has already extended the implementation deadline by two months, from April to July, in response to feedback from firms.
It has also phased the Duty in two stages over two years, with the deadline for open products in July 2023 and closed in July 2024.
Mr Mills said: “A small number of firms may have seen the task as too big and adopted an avoidance tactic in the hope that it will all go away, but we can confirm that the Consumer Duty will not go away.”
He added that advisers still have time to deliver, “But you must act now.”
He was speaking at today’s Countdown to Implementation of the Consumer Duty event hosted by Deloitte.
In his speech he set out what the regulator expects firms to do between now and the Consumer Duty July deadline.
He said: “You should share information with your commercial partners and make sure they are on board. This will include your distribution network and wholesalers as well as retailers and any third parties.
“You should focus on the areas that will have the biggest impact on outcomes for customers. Ask yourself the obvious question: is your product or service designed to deliver good outcomes for consumers?
“You can make sure you have narrowed your target market and that they can understand your communications.”
He also advised firms to “spring clean any sludge practices that are lingering” such as punitive exit fees or unfair charges.
He said the FCA is in the process of sending out industry-specific letters which build on the guidance firms already have, and help firms understand its priorities for embedding the Duty in their business area.
The regulator will be surveying around 600 smaller firms next to check how prepared they feel with their implementation plans.
After the deadline, Mr Mills said the FCA will take a pragmatic approach and will help those who are taking their final steps towards meeting the standards of the Duty.
He said the regulator will take action against breaches of the Consumer Duty, but reminded firms that it is not retrospective.
Mr Mills said: “It will not mean organisations will be taken to the Financial Ombudsman Service for past actions or omissions so long as they are put right by July for products or services that are still on offer.”
He said over the next five months, it will be essential for firms to work together across the manufacturing and distribution chain to deliver good outcomes, including the delivery of services has been outsourced to other parties.
“At every stage of the regulatory life cycle, we will ask you to demonstrate your business models, actions you have taken and how your culture is refocusing on good customer outcomes.
“We will be looking to see that consumers receive communications they can understand, are offered products and services that meet their needs and offer fair value, and they get the customer support they need.”
He said one milestone to look out for is the end of April, which is when manufacturers will need to complete all reviews necessary to meet the four outcome rules and share information with distributors to help them meet their obligations.
