The Financial Conduct Authority (FCA) has published a “Dear CEO” letter entitled ‘Implementing the Consumer Duty for the Debt Advice Portfolio’.
The letter reminds firms whose primary business model is debt advice that the Consumer Duty is a significant shift in the FCA’s expectations, bringing a more outcomes-focused approach to consumer protection and raising standards of care that firms give customers. It also sets out:
- The implementation timeline, key elements of the Duty and how it applies to firms in the debt advice portfolio.
- Expectations for how firms should embed the Duty, including consideration as to whether debt counselling and/or debt adjusting products and/or services are designed to meet the needs of intended customers, provide fair value, support customer understanding, and support customers’ needs throughout the lifespan of the product or service.
- How firms should evidence the outcomes their customers are getting.
- Feedback from the recent review of firms’ implementation plans.
- The approach to supervising the Duty and planned next steps.
Senior managers in the debt advice sector are reminded of their responsibilities and priorities:
“We expect the Consumer Duty to be a top priority for you personally. We want good outcomes for customers to be at the heart of firms’ strategies and business objectives, and leaders have a key role to play here. Firms’ Boards and senior management should embed the interests of customers into the culture and purpose of the firm.”
The letter also acknowledges that debt advice and debt solution providers are likely to see much greater demand for their services from customers in more complex and challenging circumstances given the rising cost of living, and sets out how they should address this.