October Updates you need to know: Consumer Duty Act
By the end of October 2022, enterprises’ Boards (or equivalent management bodies) should have approved their implementation plans, and they should be able to prove that they have been closely examined and evaluated to ensure that they are workable and reliable enough to fulfil the new criteria. In addition, The FCA has warned businesses to prepare for questions about the details of implementation plans, Board papers, and minutes from meetings with supervisors.
The October deadline acknowledges that businesses will need detailed preparations in order to implement the Duty fully and promptly. By the deadline in October, The FCA don’t necessarily expect businesses to have fully scoped out all of the work necessary to embed the Duty, but they do expect them to have planned how they will do so in advance to facilitate prompt implementation.
Plans from businesses should be adequately prepared by the deadline in October to give the FCA and the boards that oversee them confidence that the Duty’s requirements have been thoroughly studied and will be implemented for both new and existing products by July 31, 2023.
Consumer Duty Board champions
The FCA wants boards of directors and senior management at businesses to make sure that achieving positive consumer outcomes is at the heart of their company’s culture, strategy, and goals.
The FCA stated in FG22/5 that they expect firms to have a champion at the level of the Board (or a similar governing body). Wherever possible, they have recommended that this advocate be an Independent Non-Executive Director (NED). To guarantee that the Duty is considered in a meaningful way, they have expected that this advocate will be at a suitable Board level for bigger organisations with group structures.
What is the responsibility of a Board Champion?
The Board champion’s main responsibility is to aid the Chair and CEO in making sure that the Duty is regularly brought up in all pertinent meetings and that the Board is confronting the firm’s management on how it is implementing the Duty and putting the needs of customers first.
This is not a duty that the Senior Managers & Certification Regime specifies (SM&CR). Firms are free to structure this job in a way that works with the existing roles and duties on their boards because the FCA has not been prescriptive about it.
Updates on the definition of closed products
According to the FCA The Duty comes into effect on:
- 31 July 2023 – for new and existing products or services that are open for sale or renewal
- 31 July 2024 – for closed products or services
Products that are closed are ones that are no longer advertised, distributed, or available for renewal. As long as the product or service stays closed to new consumers, it would still be regarded closed even if existing customers may continue to pay according to the present product conditions.
A pension programme that is closed would nevertheless allow current policyholders to make contributions even though it is no longer provided to new clients. Businesses must evaluate each product to decide whether it is closed.