Some financial services firms are at risk of being unable to apply the new Consumer Duty rules which come into force in six months, the FCA has warned.

A number of firms are falling behind with their Consumer Duty planning, the FCA says.

In its latest review of how firms are planning to implement the new Consumer Duty, the regulator revealed that some firms have slipped behind with their planning, raising the risk that they may struggle to apply the Duty effectively once the rules come into force at the end of July. 

The FCA has not disclosed how many firms are behind.

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Over the remaining six months of this implementation period, the FCA said it wants firms to particularly focus on:  

• Prioritising: Firms should make sure they are prioritising effectively, with a focus on the areas that will make the biggest impact on outcomes for consumers.  
• Making the changes needed: The FCA urges firms to ensure they are making the changes needed so consumers receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.  
• Working with other firms: Firms need to share information and work closely with their commercial partners to make sure they are all delivering good customer outcomes. The FCA has found that some firms need to accelerate this work to implement the Duty on time.  

The rules come into force on 31 July for new and existing products or services that are open to sale or renewal, and 31 July 2024 for closed products or services. 

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Given the scale of the reform, we recognise that some firms need to make significant changes.

“For firms which are further behind in making the necessary changes, there is time to put that right and for them to show they are acting in the spirit of the new Duty.”

He said the Consumer Duty will bring about a step change in the way financial services firms treat their customers.

Mr Mills said: “We welcome the work firms are doing to implement it. Firms will also see the benefits of the Duty, with increased trust in the sector, more flexibility to innovate and in time fewer rule changes.”   

Despite the evidence of struggling firms, the FCA said when it reviewed a sample of implementation plans it found that many firms understand and embrace the shift to delivering good customer outcomes.

It added that many firms have established extensive programmes of work to comply with it properly.