We commissioned Ipsos UK to undertake an anonymous survey of 1,230 firms in some of the sectors in scope of the Consumer Duty (the Duty) to help us understand how prepared firms were in meeting the implementation deadline of 31 July 2023, and how we could support firms to embed the Duty effectively.
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The fieldwork for the survey ran between March and early May 2023 so the results give us a snapshot of firms’ preparedness 3 months before the deadline.
We focused the survey on sectors and sub-sectors where it appeared that firms may have been less engaged and prepared. This includes sectors where firms are smaller, have less regular contact with the FCA (either directly or through a trade body), or where financial services is not their primary business. This means some retail sectors (such as banks, building societies, general insurers, and asset managers) were excluded from the survey and the results are not representative of all the firms in scope of the Duty. The full survey results contain more information about the methodology and approach to sampling.
We received interim results in early May and have since issued further targeted communications to firms in sectors where understanding and preparedness was lower.
This survey is the first in a series of quantitative and qualitative work that we will conduct with firms this year.
Overall, the findings of these selected firms’ preparedness 3 months before the deadline confirmed what we have been seeing through our supervisory work and engagement:
- There were very high levels of engagement and understanding of the Duty, including in many of the sectors where historically regulatory change has had lower levels of engagement.
- Most firms believed they were on course to implement the Duty by the 31 July deadline. 64% of firms surveyed said they would be fully compliant by the deadline and a further 23% said they would comply with most requirements by the deadline but would still have some work to do. 7% of firms surveyed said they would still have significant work to do after the deadline or had not started work on the Duty. All firms need to make the most of the time before the 31 July implementation deadline (see Next steps for firms).
- Two groups of firms – retail finance providers and debt advice firms – scored consistently lower than others on engagement, understanding, and implementation progress. We are issuing further direct communications to these firms and working with industry bodies to amplify messages.
- Firms had made use of the support provided by the FCA and found it helpful. The two areas that firms said they would like more information on were outcomes monitoring and the price and value outcome. Since firms were surveyed we have published a review of firms' fair value assessment frameworks which includes good and poor practice to help firms implement this aspect of the Duty, and a podcast explaining how firms need to monitor outcomes for consumers after the Duty comes into force.
Next steps for the FCA
We are pleased to see that most firms are making substantial efforts to implement the Duty to the deadlines required. We know from our supervisory and engagement activity that many firms have already taken significant steps to accelerate their implementation work since this snapshot of firms’ progress was taken in March to early May. However, we remain concerned that a small minority of firms have not prioritised the Duty sufficiently and made use of the substantial support available.
The survey was anonymous, but we are using the sectoral insights from it (and our wider supervisory intelligence) to help target our future work to supervise the Duty. Firms in sectors highlighted by this survey as not giving the Duty adequate focus can expect more scrutiny from us in the coming months.
We will continue to use the feedback from firms to further target and develop our communications.
Next steps for firms
All firms need to make the most of the time before the 31 July implementation deadline.
- Firms that are confident of meeting the implementation deadline need to maintain oversight of their implementation plans to ensure they remain on track to deliver on time. Boards and management bodies should assure themselves that their firm has fully engaged with the details of the requirements and the shift to focus on consumer outcomes.
- Firms that have made good progress but are struggling to complete all the work required before the deadline need to make maximum use of the time available, prioritising action that improves consumer outcomes and reduces risks of harm. Oversight of this prioritisation is essential, and boards and management bodies need to ensure they have identified any potential gaps or weaknesses in their implementation and any action needed to remedy this.
- Firms that have not been taking the Duty seriously and are a long way from meeting its requirements need to make strenuous efforts in the next month to accelerate their implementation work, prioritising the work that is likely to have the greatest impact on consumer outcomes.
- Firms must alert us if they believe they will be in significant breach of the Duty when it comes into force and should be prepared for FCA to take robust action where we see firms’ failure to implement the Duty causing actual or potential harm to consumers. This could include holding senior managers to account where they have failed to act to implement the Duty and prevent such harm.
To help firms make the most of the time remaining, we are highlighting key questions from the Finalised Guidance for firms to keep asking themselves. These should help firms reflect on their implementation of the Duty and identify gaps or areas for improvement.