FCA Consumer Duty - are you ready for Monday 31 July?

The Financial Conduct Authority's new Consumer Duty comes into force on Monday 31 July for new and existing products and services. There is an extra year to establish compliance with the Duty for any closed products, with the deadline being July 2024. 

The Duty applies to any organisation that conducts (and has permission from the FCA to conduct) certain regulated activities. For many housing associations, that could be those who provide debt advice to residents or who have entered into and/or are managing regulated loan portfolios. 

Are you prepared?

The FCA has published numerous guidance on how regulated firms can prepare for compliance. In particular, the FCA expects boards or equivalent management bodies to have clear oversight of implementation plans and strategies. The finalised guidance contains a range of questions to assist with embedding the Duty, including: 

1. Are you satisfied your products and services are well designed to meet the needs of consumers in the target market, and perform as expected? What testing has been conducted?  
2. Do your products or services have features that could risk harm for groups of customers with characteristics of vulnerability? If so, what changes to the design of your products and services are you making?   
3. What action have you taken as a result of your fair value assessments, and how are you ensuring this action is effective in improving consumer outcomes?  
4. What data, MI and other intelligence are you using to monitor the fair value of your products and services on an ongoing basis?  
5. How are you testing the effectiveness of your communications? How are you acting on these results?   
6. How do you adapt your communications to meet the needs of customers with characteristics of vulnerability, and how do you know these adaptions are effective?   
7. What assessment have you made about whether your customer support is meeting the needs of customers with characteristics of vulnerability? What data, MI and customer feedback is being used to support this assessment?  
8. How have you satisfied yourself that the quality and availability of any post-sale support you have is as good as your pre-sale support?  
9. Do individuals throughout your firm – including those in control and support functions – understand their role and responsibility in delivering the Duty?  
10. Have you identified the key risks to your ability to deliver good outcomes to customers and put appropriate mitigants in place? 

What does this mean for the social housing sector?

It's important to take a proportionate view as to how the Duty should be implemented within a housing association, and particularly where the extent of regulated activity is a very small part of the overall business. The FCA will take action against organisations where there is a failure to comply, however the priority will be the most serious breaches and where there is evidence of harm or risk to consumers. 

While housing associations should ensure that they have an action plan for implementation, this will not necessarily require a major overhaul to current processes. In some cases, associations may already be prioritising the needs of the consumer in a way which satisfies the new Duty.

The FCA's Consumer Duty page contains a wide range of resources to help understand the FCA's requirements. If you have queries on how the Consumer Duty applies to your organisation and what you should be doing to implement it effectively, please contact me for further advice.