HSF issues advice on FCA review of Consumer Duty implementation plans

Legal firm Herbert Smith Freehills (HSF) has offered key areas of focus for companies’ efforts to comply with the Financial Conduct Authority’s (FCA) Consumer Duty regulatory requirements.

The regulator’s review of the progress made by firms contains some important guidance for firms to follow in the lead up to 31 July 2023, HSF said.

HSF offered three bullet pointed key areas to focus on.

The first of these is a focus on effective prioritisation, noting that “firms need to prioritise appropriately, focusing on reducing the risk of poor consumer outcomes and assessing areas where firms are furthest away from meeting the Duty”.

The second is to carefully examine the substantive requirements of the Duty and “avoid over-confidence that existing procedures are sufficient” for compliance, HSF warned.

“The scope of the Duty is extensive and we have seen that careful review of the new rules and definitions can lead to some surprising conclusions,” the legal firm said.

Thirdly, HSF recommended that organisations work with other firms in the distribution chain.

“The FCA notes a lack of engagement to date between firms in distribution chains and suggests that this should become an area of focus. In our experience, this includes working with overseas firms that are not themselves authorised in the UK but can affect the ability of UK firms to meet their obligations under the Duty,” HSF said.

HSF also provided headline summaries of a selection from the FCA’s list of good and bad examples. Click here to find the full list of examples.