Businesses are in danger of failing to embrace the opportunity that the upcoming Consumer Duty regulation presents and may not be compliant due to a failure to prepare, new research from Moneyhub shows.

The research findings reveal that only 22% of firms believe that they are currently compliant with the new regulation. 

This is despite 79% of Financial Conduct Authority (FCA) regulated firms acknowledging the significant impact that the new Consumer Duty regulations will have on their way of doing business.

Meanwhile, 56% of decision makers at these firms fear that their business is not prepared, with no projects in place to become compliant ahead of the deadline. 

Moneyhub says this is a significant concern given the FCA expects boards to have an implementation plan approved by the end of October, which is three weeks away. 

The new rules demand the incorporation of a new consumer principle, that asks firms to provide good outcomes for retail customers, details cross-cutting rules, which consist of expectations for behaviour across three common themes, and provides rules relating to four outcomes the FCA expects to be delivered.

In July, the FCA published the long-awaited new Consumer Duty rules, extending the deadline for implementation from 30 April 2023 to 31 July 2023.

The new deadline is for existing products and services. For closed items, firms have until 31 July 2024 to comply.

While the FCA has shifted the first implementation deadline for firms, Moneyhub says there is a risk that many will not meet the new deadline. 

Moneyhub chief executive Samantha Seaton comments: “While many firms believe they are already customer-centric, Consumer Duty will test the reality of this. The new regulation demands a level of customer knowledge that most firms are yet to appreciate. The amount of data needed on the customer to comply with Consumer Duty requires a new level of operation for most businesses.”

“There is an expectation that boards already have a plan in place by October. However, we can see that this is unlikely to be the case.”