The Consumer Duty principle proposed by the Financial Conduct Authority (FCA) represents a significant shift for the UK financial services sector, creating a new and higher standard for firms to protect retail customers, and serve their best interests. If that sounds like a rule with a broad impact, you are right. Covering all customer interactions — both direct and indirect — the new standard is amongst the biggest regulatory change firms have been subject to in some time.
As the FCA has said, “For many firms, this will require a significant shift in culture and behaviour.” In other words, complying with the duty will be no small undertaking. Just assessing the impact and developing action plans will require a great deal of work. Most changes may be dependent on — or complementary to — change programmes that are already underway, including technology deployments designed to automate back-office processes and enhance customer experiences. With the final rules due at the end of July 2022 and a proposed implementation deadline of April 2023, there is clear urgency to act.
To understand how the market is approaching the new duty, we spoke to 32 firms across the financial services industry. We wanted to learn about their priorities, their key transformation and technology challenges, and how their implementation plans are progressing. Our conversations included large global banks, smaller challenger and specialist banks, both life and pensions - and general insurers, as well as wealth and asset managers. Combined, these businesses have responsibility for more than 60% of the UK assets under management.