Consumer Duty firm survey – Spring 2023

In view of the upcoming new Consumer Duty, the Financial Conduct Authority (FCA) commissioned Ipsos UK to conduct a survey on behalf of the FCA to find out about the (level of) preparedness of supervised, in-scope firms with a focus on sectors where firms may have been less engaged and prepared. The FCA thereby hoped to identify areas where more work is needed and where it could potentially support firms in their preparation.
The survey was conducted anonymously among 1,230 entities between March and early May 2023, providing a snapshot of their preparedness three months before the entry into force of the Duty. The key results of the survey are briefly discussed below. It shall be noted that in-scope firms included financial advisers, wealth managers, brokers, payment service providers, insurance companies, SIPP operators, investment firms and several others. Excluded were, among others, asset managers, retail banks, custodians, and mortgage intermediaries.
#### Results of the anonymous Consumer Duty survey:
(1) High levels of engagement and understanding: There was a significant level of engagement and understanding of the Duty among the surveyed firms. This was notable even in sectors that historically had lower levels of engagement with regulatory changes.
(2) Compliance expectations: The majority of firms believed they were on track to implement the Duty by July 31, 2023, the official launch of the Duty. Specifically, 64% of the surveyed firms stated they would be fully compliant by the deadline, while an additional 23% indicated they would comply with most requirements but still have some work remaining. Only 7% of the firms admitted significant shortcomings in their level of preparedness or noted that they had not yet started working on the Duty altogether.
(3) Challenges in retail finance providers and debt advice firms: Two specific groups of firms, namely retail finance providers and debt advice firms, consistently displayed lower levels of „engagement, understanding, and implementation progress“ compared to other sectors. As a result, the FCA plans to issue direct communications to these firms and collaborate with industry bodies to emphasize the necessary messages.
(4) Utilization of FCA support: The surveyed firms acknowledged the support provided by the FCA and found it overall quite helpful. However, there were two areas where firms expressed a desire for more information: outcomes monitoring and the price and value outcome. As a result, the FCA recently published a review of fair value assessment frameworks, which outlines good and poor practices to aid firms in implementing this aspect of the Duty (please see EventID 21065 in this context for more information). Additionally, a podcast was released to explain how firms need to monitor outcomes for consumers after the Duty is in force (EventID 21847).
To conclude, the FCA states that – while there were positive indications of firms‘ engagement and preparedness – there were specific sectors that required additional attention and support to ensure compliance with the Duty. These firms have not prioritized the Duty sufficiently and have not taken advantage of the available support. Swift action is needed by those firms to ensure compliance by the deadline.
—
The FCA has also summarized a number of steps it expects firms to take in the remaining time before the Duty comes into force including the following:
– continuous oversight of the implementation status and the level of preparedness;
– adoption an application of outcome monitoring measures;
– prioritization of actions by those firms struggling to meet the deadline;
– engagement of upper level management of those firms; and
– immediate notification of the FCA, if – upon the effective date – a firm cannot meet the deadline.