Summary of the speech by Sheldon Mills, Executive Director, Consumers and Competition, delivered at KPMG.
Summary
The Financial Conduct Authority (FCA) has made significant strides in implementing the Consumer Duty for open products, with a looming deadline for closed products compliance. Key initiatives include publishing a small firms survey and a good and bad practice guide, aiming to foster an environment conducive to healthy competition and innovation within the financial services sector. The FCA emphasizes the importance of prioritizing areas with the greatest risk of consumer harm and encourages firms to adopt a data-driven approach to demonstrate compliance and deliver value to consumers.
Key Points
- Consumer Duty came into force for open products, with closed products compliance deadline approaching.
- The Duty aims to create a competitive and innovative financial services environment.
- Firms are encouraged to prioritize areas with significant consumer harm risk.
- A small firms survey and a practice guide have been published to aid compliance.
- Success stories include firms offering right products to the right customers, reducing fees, and enhancing value.
- Challenges include ensuring fair pricing, addressing data gaps, and engaging less active customers.
- Closed products deadline is a focus, with emphasis on evidencing good consumer outcomes.
- Firms should adopt a risk-based approach to prioritization and compliance.
Key Statistics
- 37% of advice firms have revised their fee structures post-Consumer Duty introduction.
- Significant progress has been observed among small firms regarding Duty implementation.
Key Takeaways
- Consumer Duty is pivotal for both consumer protection and the advancement of the financial sector.
- Firms need to prioritize compliance efforts based on the potential for consumer harm.
- Effective data management and a solid understanding of consumer needs are critical for Duty compliance.
- Engaging with and providing value to consumers, especially those with closed products, is essential.
- A collaborative approach between the FCA and firms is encouraged for addressing compliance challenges.
- The upcoming closed products compliance deadline is a critical focus for the industry.
- Firms should leverage lessons learned from open products compliance for closed products.
- The Duty’s success hinges on firms’ ability to demonstrate fair value and good outcomes for all consumers.
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