UK Finance: Consumer Duty implementation should not be rushed

Regulator the Financial Conduct Authority (FCA) has proposed giving firms nine months to interpret its finalised requirements, assess their full suite of products and services against them and undertake change programmes. This would go alongside changes to governance processes and IT systems that underpin them. 

UK Finance says this would be a “tall order” at the best of times, but is especially difficult while companies continue to devote significant resources to supporting their customers through the financial impact of the pandemic. 

The regulator first announced the new Consumer Duty last summer, which it says is designed to raise industry standards by putting the emphasis on firms to get products and services right in the first place. 

It will require businesses to focus on supporting and empowering their customers to make good financial decisions and avoid foreseeable harm at every stage of the customer relationship. Companies will also have to provide consumers with information they can understand, offer products and services that are fit for purpose, and provide helpful customer service. 

UK Finance says that, although the Consumer Duty - following industry consultations - is in an improved state, it will be a significant undertaking for firms and not without risks for consumers. 

In particular, the trade body believes the subjectivity of central concepts such as “good faith,” “foreseeable harm” and “value” could lead to the Consumer Duty being implemented inconsistently across firms and markets. And this risk will be exacerbated if its implementation is rushed.