Financial Conduct Authority (FCA) executive director of consumers and competition Sheldon Mills says the constant “striving for excellence is at the heart of innovation and will drive the growth of our financial services industry”.

Mills, whose comments were made today (22 February) during Deloitte’s ‘Countdown to Implementation of the Consumer Duty’ event, highlights that it will also drive “effective competition for customers”.

He states: “Being more upfront about what customers can expect from you should mean fewer complaints as we get it right from the start and fewer reactive rules down the line.”

“It will boost competition, as firms strive to offer the best in competing for clients. But it should also provide an opportunity to inspire customer loyalty.”

“Ultimately, it will also increase trust in financial services, levelling up standards so that those who are striving hard are not taken down by industry stragglers,” he adds.

The Consumer Duty deadline for open products and services is 31 July this year, while for closed products are services the deadline is 31 July 2024.

Mills explains that over the next five months, companies should share information with commercial partners such as distribution networks and wholesalers as well as retailers and any third parties.

He says: “You should focus on the areas that will have the biggest impact on outcomes for customers. Ask yourself the obvious question: is your product or service designed to deliver good outcomes for consumers?”

“You can make sure you have narrowed your target market and that they can understand your communications.”

Mills notes that the FCA recently looked at the plans of around 60 of the largest firms that have fixed supervisory teams and who operate mainly in retail financial services markets.

While he says that there had been “so many good examples” of firms that have taken to the spirit of Consumer Duty, there had also been some “struggling”.

Mills comments: “Some initial efforts to address the Duty appeared superficial while others were over-confident in their existing systems.”

“Some firms had not focused on how they would work with other firms along the manufacturing and distribution chain. For others, governance seemed patchy.”

“We want someone at board or equivalent level to stand up and take ownership for championing the Duty. We don’t want the champion role to be shared across the entire board as this simply dilutes it.”

“Some firms had no details of how they would embed good outcomes for consumers. Others did not present clear plans for delivering staff training, changing the culture or reviewing rewards.”

However, he highlights that there is “still time to do so”.

Mills explains that the FCA is in the process of sending out “industry-specific letters” which build on the guidance firms already have.

He suggests this will help firms understand the FCA’s priorities for embedding the duty in their business area.

In addition, Mills reveals that the authority will be surveying around 600 smaller firms next to check how prepared they feel with their implementation plans.

He says: “After the deadline, we will take a pragmatic and proportionate approach and will help those who are taking their final steps towards meeting the standards of the Duty.”

“Of course, we have a duty to take action, particularly against serious breaches, and we always go after the worst offenders who are at risk of having the biggest impact on our financial services industry. I am sure that will be something supported by the many who have expended the time and resources to meet the duty.”

In the build up to the July deadline, Mills notes that it will be “essential for firms to work together across the manufacturing and distribution chain to deliver good outcomes”.

“One milestone to look out for is the end of April, which is when manufacturers will need to complete all reviews necessary to meet the four outcome rules and share information with distributors to help them meet their obligations.”

The four outcomes relate to the governance of products and price and value, consumer understanding, and consumer support.

Mills concluded: “A lot can be achieved in the next five months. Thank you to those who have expended energy and resources to do everything in your power to meet this deadline. We know some have more work to do.”