When is the Consumer Duty deadline?
Originally due to be implemented by April 2023, the new Consumer Duty rules have been postponed by four months. Firms now have until 31 July 2023 to get organised.
Despite the extension, the FCA is concerned that some firms are not taking the change seriously enough. Some implementation plans examined as part of a multi-firm review in January were ‘complacent about past improvements, initiatives or current frameworks,’ the FCA said.
With the clock ticking, it is high time for firms to finalise their plans for new and existing open products and services.
What’s it all about?
When confirming the new Consumer Duty rules, the FCA explained that these will ‘set higher and clearer standards of consumer protection across financial services.’ Consumer Duty includes a new Consumer Principle that requires firms to act to deliver good outcomes for consumers.
The rules lay out the FCA’s expectations of the relationship between firm and consumer with regards to:
- The governance of products and services
- Price and value
- Consumer understanding
- The provision of helpful and accessible consumer support
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, thinks that the Duty “raises the bar for the firms we regulate”. He added, “The current economic climate means it is more important than ever that consumers are able to make good financial decisions. The financial services industry needs to give people the support and information they need and put their customers first.”
Clarity of communication
Firms will need to place the interests of their clients at the heart of their purpose and culture. This means ensuring these interests are embedded throughout the organisation.
Well-considered and regular client contact can provide clear and timely information about products and services in a way that retail customers can understand. Communications need to be effective whichever channel is used, whether online, face-to-face or over the phone.
In its guidance, published in July 2022, the FCA said that each communication should be considered individually and must comply with the ‘relevant rules.’ The guidance also states that firms should take particular care when communicating with consumers in vulnerable circumstances. Since all clients can go through periods of vulnerability, non-financial outcomes become a key focus.
The next steps
Consumer Duty can be seen as an opportunity to reflect on your firm’s approach to client relations. By putting customer outcomes at the heart of your culture, you can build best-in-class customer experience that can provide a competitive advantage.
When looking at how to adapt to the new rules, it is a good idea to dial things right back. Think about your values and what good outcomes really look like. Across products, service, communications and customer support, there are clearly several important strands that firms need to address.
As you review the final guidance, you’ll likely want to draw up an action plan. You might be setting up a task force to consider all your products and services. Crucially, you’ll need to evidence it. Doing so can help build outstanding, trusting relationships with your clients, as well as building your reputation and brand to provide an unrivalled client experience.
How TOMD can support you to enhance your client experience
TOMD can help you support and communicate with your clients. Our team of marketing experts are here to help you communicate in a clear and compliant way through your website, your collateral and all other client-facing communications, including videos.
Adapting to Consumer Duty is about positioning your business for the future of advice. We can help define your brand, market your services and ensure you are communicating in a compliant way. Get in touch with our specialist team today!