The Financial Conduct Authority (FCA) has warned that some firms may struggle to apply the Consumer Duty, with six months left before the new rules come into force.

The regulator reviewed a sample of implementation plans and found that some firms are behind in their planning. As a result, the FCA fears these firms may find it time difficult to apply the Consumer Duty effectively on time for the deadline.

The rules come into force on 31 July 2023 for new and existing products or services that are open to sale or renewal. The deadline for closed products or services is 31 July 2024.

Yet the FCA also highlighted that many firms show they understand and embrace the shift that the Consumer Duty is aiming to bring.

It also noted that these firms have established extensive programmes of work to comply with it properly.

FCA executive director of consumers and competition Sheldon Mills says: “The Consumer Duty will bring about a step change in the way financial services firms treat their customers and we welcome the work firms are doing to implement it.

“Given the scale of the reform, we recognise that some firms need to make significant changes.

“For firms which are further behind in making the necessary changes, there is time to put that right and for them to show they are acting in the spirit of the new duty.”

He adds: “Firms will also see the benefits of the duty, with increased trust in the sector, more flexibility to innovate and in time fewer rule changes.”

Over the remaining six months of the implementation period, the FCA wants firms to particularly focus on prioritising, making the changed needed and working with other firms.

The regulator expects firms to make sure they are prioritising effectively. They should focus on the areas that will make the biggest impact on outcomes for consumers.

The FCA also urges firms to ensure they are making the changes needed. This is to ensure consumers receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.

The regulator also asks firms to share information and work closely with their commercial partners to make sure they are all delivering good customer outcomes.

The FCA has found that some firms need to accelerate this work to implement the Consumer Duty on time.