- Extended deadlines reflect ‘major shift’ ambitions but remain challenging.
- Extra year for closed legacy books will allow prioritised improvements across customer groups.
- Scope extended to beneficiaries of trust-based schemes supported by FCA regulated firms.
- Additional 48 pages of guidance including on distribution chain responsibilities with further sector specific guidance promised.
- Collaboration across the distribution chain remains key.
The FCA today published its Policy Statement and final rules on the New Consumer Duty, after a second consultation closed back in February.
Steven Cameron, Pensions Director at Aegon said: “We fully support the FCA’s new Consumer Duty and its ambition to ‘level up’ all parts of the retail financial services industry, delivering good outcomes and putting customer needs first.
“This will involve a fundamental industry-wide review to make sure products and services meet customer needs and offer fair value, testing customers can understand all forms of communication and examining whether customer support is truly meeting needs.
“Carrying out such an all-encompassing review thoroughly will take time. We’re pleased the FCA has listened to requests for an extended and prioritised timeline. Deferring the deadline for ‘open’ products and services, albeit by only three months till July 2023, is welcome but timelines remain tight. The extra year to implement changes for legacy books closed to new business is also helpful, particularly for firms with policies many decades old, with policy conditions written for a very different world. It’s in everyone’s interests, including consumers, that priority improvements are delivered first.
“Many firms, including Aegon, have already undertaken a gap analysis against the draft FCA rules, and will now revisit this to reflect these final rules and guidance. One significant change is the FCA has amended the definition of retail customer to include beneficiaries of trust‑based pension schemes, where an FCA authorised firm provides services to a trustee.
“We had called for additional guidance in many areas and the final version of the guidance has increased from 72 to 120 pages, with further sector specific guidance promised. There is more guidance on the respective responsibilities across what are often complex distribution chains involving fund managers, platforms, product manufacturers and advisers.
“To deliver on the new Duty, every firm will need to understand changes in approaches of those before and after them in the distribution chain. This will be one of the greatest challenges ahead and close collaboration will be key. We hope through an iterative process that industry standard approaches will emerge in areas such as data exchange and presentation of ‘value assessments’.”