There is no doubt that the New Consumer Duty (NCD) reflects a seismic change in the way firms will operate, think, and act.

It poses philosophical and – frankly – existential questions that means all staff members will need to consider how it will impact them, their role, the products, and customers they work with, and whether the control environment in which they operate is effectively mitigating the core risks, both to the Firm and its customers.

All of you will be working hard to meet the July 2023 deadline, but unfortunately, it only really starts then. The Consumer Duty will need to be actively embedded within your organisation, at every stage. We have written a series of blogs, setting out some of the key things that you’ll need to consider. These include:

• Product design and governance
• Governance and management information
• Fees, charges and fair value
• Policy review and processes
• Staff training
• Culture

However, before we dive into some detail, we thought it would be useful to set the scene. Much of this will have been covered before, but reiterating it, and seeing the Financial Conduct Authority (FCA)’s continued pressure and emphasis on the Consumer Duty is telling.

How will we go from project-based readiness to business-as-usual embedding the New Consumer Duty?

The FCA’s most recent business plan makes it clear that the Consumer Duty will be the Regulator’s primary way of managing firms’ behaviours and activities on the cost-of-living crisis. The current economic backdrop means that there will be little margin for error once we pass the July deadline. Risks of harm will be crystalising, and the pace of economic change in the past few years means that the amount of work required to identify foreseeable harms will likely be very significant.

Moreover, the FCA has been clear about the scale of cultural change that they expect the Consumer Duty to bring; and compliance with it will not be a one-time activity: it will change, update and iterate as conditions in the UK change, and the Regulator’s expectations will only go one way. The FCA, firms and customers will inevitably identify unintended consequences of the Duty (financial exclusion, for example). We must therefore expect to see discussion papers, calls for Input and rulebook changes, but the Consumer Duty is sufficiently subjective to allow for such changes and iterations. This is not by accident.

We urge you to think about how the challenges we identify in our future blogs impact you, your firm, and – critically – your customers. Ultimately, the Consumer Duty boils down to one thing: acting in the best interests of customers. How will you, your teams, products and services do this, and how will your Board monitor and manage this?

If you have questions on anything being discussed, please contact Ewen Fleming, Si Mathavan, or myself.