What do Boards need to do by the end of October?

While firms are not expected to have fully scoped all required work, Boards will be expected to have:

• scrutinised and agreed the implementation plan to achieve timely compliance
• understood their role in overseeing their firm's ongoing compliance.

In the event implementation activities are not fully scoped out by 31 October, the Financial Conduct Authority (FCA) expects firms to set out their plans for doing so to ensure timely implementation.

What should Boards look for in their firm’s implementation plan?

Implementation plans are a key step to implementing the Consumer Duty and Boards must allow adequate time for review and challenge. 

Firms should consider how to meet the Consumer Duty standards across the entire organisation. It is vital that the scale of the changes and the time for implementation are not underestimated given the breadth of the Duty.

Boards should consider whether the following factors have been addressed:

• Resource availability and capability for delivery
• Governance and oversight
• Collection and use of data
• Management information and reporting
• Target market identification and customer needs analysis, products and service design reviews and risk assessments
• Customer journey ‘sludge’ audits to identify unhelpful friction in the journey
• Ongoing measuring and testing of outcomes for customers, particularly those in vulnerable circumstances
• Budgetary considerations
• Reliance on third parties, including distributors and manufacturers
• Plans for assurance

Boards should also consider how they are going to monitor the implementation of the plan through 2022/23 to make sure the firm remains on track.

What other actions will Boards need to take?

The FCA expects strong senior oversight of the Duty. This includes a ‘champion’ at Board level who will make sure that the Duty is raised, discussed and challenged appropriately. This is a crucial step to ensure that firms consistently deliver the scale of change needed and establish the tone from the top. The role should ideally be fulfilled by an independent non-executive director, though there is some flexibility if an alternative is more appropriate.

Boards should be prepared to evidence to the FCA that they challenged the implementation plans through Board papers and minutes. In the published guidance, the FCA provided a list of key questions Boards should raise to guide discussions.

Boards also need to review and approve an assessment of whether the firm delivers good outcomes for its customers, at least annually. This is in addition to the approval of a mitigation action plan for any identified weaknesses.