Consumer Duty and Implementation Plans


With the upcoming deadline at the end of October for Consumer Duty, creating a clear and coherent implementation plan is of the utmost importance. The implementation plan will need to include how the firm proposes to implement the Consumer Duty, including the actions to be taken, decisions to be made and the timeframes within which each step is to be carried out. The latest FCA Policy Statement and Finalised Guidance places a heavy emphasis on evidence and record keeping. Firms should also bear in mind that the FCA has said that they should expect to be asked to share implementation plans, Board papers and minutes with supervisors and be challenged on their contents.

Overall, the uptake of the Consumer Duty and meeting the FCA’s deadlines is the responsibility of the firm’s Board. The Board has a requirement to oversee the delivery and success of the regime taking into account any mitigating factors. The Board should challenge the business to ensure that deadlines and objectives are realistic and attainable. For example:

  • Mobilisation– firms must consider the time required at the outset of the project to educate staff on the consumer duty and determine the uplift required. Without securing this understanding and buy-in from operational areas, project implementation will face significant headwinds.
  • Assurance– Time should be included within the plan for assessment of whether the project workstreams have delivered against the requirements, and confirmation that the business will be operating in line with the expectations of the Duty. It is good practice for this assessment to include an independent review, so this should be factored into the timeframe. In addition, firms should expect there to be  a degree of rework and revision before the workstreams are finally signed off.
  • Scope of the Plan– Firms should not over-focus on changes to policies and customer documentation. These are important elements, but they are just a part of the overall scope. Meeting the requirements of the Consumer Duty will touch all elements of the ‘three lines of defence’ model.

The main features of the three lines of defence model are as follows:

  • First line – Functions that own and manage risks
  • Second line – Functions that oversee or who specialise in compliance or the management of risk
  • Third line – Functions that provide independent assurance

Another key function of the implementation plan is the embedding of the consumer duty into the operational areas of the business. Board members should consider the other changes that may have to be made.

Firms will need to appoint a Consumer Duty Board Champion, to support the Board in ensuring that i) the Consumer Duty is being raised regularly in all relevant discussions, and ii) the Board is challenging the firm’s governing body/management on how it is embedding the Duty and focusing on consumer outcomes. The FCA has said that the champion should be an Independent Non-Executive Director (NED), where possible.

Following these steps will not ensure success in terms of internal audit. However, they provide an effective framework, which if followed correctly, will aid in giving the business a better opportunity to be successful within the new consumer duty environment.

To conclude, firms differ in size and complexity, but all firms should recognise that the 31 October deadline is a significant milestone. In submitting the implementation plan, due consideration should be given to ensuring the board can evidence that they have given the appropriate consideration of the risks and made an informed decision regarding the plans’ adequacy.

Other key Consumer Duty dates:

-31 October 2022– implementation plan deadline

-30 April 2023 – manufacturers to share outcome of review of existing open products and services with distributors

-31 July 2023– Consumer Duty implemented for new and existing products and services

-31 July 2024– Consumer Duty implemented for closed products and services

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