Consumer Duty: FCA Multi-Firm Review

The FCA has published the results of its review of the Consumer Duty implementation plans of larger firms, in order to help firms understand its expectations.


You can read the results here. The findings reflect that, while many of the plans reviewed evidenced firms had established extensive programmes of work to embed the Duty, they also identified a number of areas for improvement and that some firms were further behind in their planning for the Consumer Duty.

Firms were required to have implementation plans in place by the end of October 2022 with the Consumer Duty rules coming into full force on 31 July 2023. The FCA have raised concerns that some firms may not be ready in time or may struggle to embed the Consumer Duty by the required date.

Around 60 of the largest firms (all of which operate in the retail financial services market) were sampled, with mixed findings. A number of good practice areas were documented across a range of areas including governance and oversight, culture and people, deliverability and third parties, in addition to the four outcomes (notably product and services, consumer understanding, consumer support and price and value). However, more concerningly, the review also highlights a number of areas for improvement, including identifying that some firms’ plans were too high level and that insufficient consideration was being given to the implementation of these plans.

The FCA has indicated that they will be looking to engage with smaller firms prior to the implementation of Consumer Duty in July 2023 and they will also be issuing a survey to a sample of different sized firms.

What now?

Following the review, the FCA have stated that over the remaining period to 31 July 2023, firms should focus on these key areas:

  • Prioritising: Firms should look to focus on the areas that are most likely to make the biggest impact and reduce poor customer outcomes.
  • Implementing changes: Firms should look to make the changes that they need to in order to comply with the customer duty. A good starting point is the customer journey and firms should consider the products and services they offer in addition to the way they communicate with clients
  • Working with other firms: A key element of being able to implement the Consumer Duty on time is working with other firms and sharing information with those in the distribution chain. Firms should therefore look to work closely with their others in the distribution chain in order to deliver good customer outcomes.

All well and good but we remain firmly of the view that the ‘Price and Value’ outcome could well be the toughest nut to crack for many, if not most, firms regardless of size.

Price and Value

The reason why this may prove difficult for firms is that it will probably require a fundamental change to business models, which could have a significant impact on business financials. Many firms are still operating a charging model that started with RDR in 2013 and which was based on a x% initial plus y% ongoing format not unlike the initial plus trail commission model that preceded it. The FCA have raised several concerns around such a model, including the potential for unfairness where a client with a larger portfolio is charged more for essentially the same service.

The FCA noted that:

  • Several firms explained they are considering how their current approach needs to change to deliver good outcomes for consumers.
  • One firm noted it needs to ensure there is a reasonable relationship between costs and benefits.
  • Another firm noted that it has new pricing models under development.
  • One firm recognised that its product pricing structure may need to change to address an issue it has identified in relation to high fees. 

While recognising that the sample of firms was relatively small compared to the total number of firms, we are surprised that the comments relate to ‘several firms’ and  ‘one firm’. The four actions listed above are almost certain to apply to ALL firms. A good starting point would be to properly identify the cost of delivering services and using that as a starting point for a new charging structure that is not only fair value for clients but also appropriately profitable for the firm.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

This review provides further evidence that firms are required to take action prior to July’s implementation of the Consumer Duty. The FCA have indicated they will conduct further sampling of firms throughout the industry and this review provides a starting point as to what firms can expect. It would appear that, while many firms acknowledge the step change that Consumer Duty brings and are looking to make the relevant changes required prior to July’s implementation date, there are still firms that are not giving Consumer Duty the required level of attention. For those firms yet to take significant action, there is still time, but we recommend that this is prioritised given that the rules come into force in around four months’ time. Lots to do, best make a start if you have not already done so.

Action Required By You

Following the review, the FCA have stated that firms need to be giving due attention and priority to preparing for Consumer Duty. These published findings indicate that many firms have much to do in the few months left before the rules take effect. We recommend that firms read the findings and ensure that plans are in place to implement the requirements. ATEB have developed a number of tools and processes to help firm implement Consumer Duty. Contact your Consultant if you would like us to help.
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About the Author

Paul is a Chartered Financial Planner and is well on his way to a Fellowship. He has a thirst for technical knowledge and, while he advises on all aspects of financial services regulation, he specialises in pensions and investments.

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