The FCA has published the key findings from its review of payments firms’ implementation of the Consumer Duty. 

It assessed how payments firms have implemented the Consumer Duty, as well as specific payment sector risks, including how they considered the Duty’s requirements, identified any gaps and addressed them. 

The Duty came into force for open products and services on 31 July 2023 and for closed products and services on 31 July 2024. 

Of the 23 firms the FCA reviewed, it rated just over half as satisfactory and did not view them as presenting a risk of significant poor consumer outcomes (although some minor actions may still have been needed). It was encouraged by the commitment of these firms to deliver good consumer outcomes in line with the Duty’s requirements.

However, it said that just under 50% of the firms in the review had only partially implemented the Duty and required significant work to comply with it. According to the FCA, these firms present either a moderate or higher risk of delivering poor consumer outcomes. The FCA is concerned about these findings which, if representative of the sector, would indicate that a substantial minority of firms may not be complying with the Duty. The FCA will continue to work with these firms to ensure any harm is mitigated promptly.

The FCA considered the following areas:

  • Products and services: establishing the target market;
  • Products and services: agent oversight;
  • Fair value assessments;
  • Consumer understanding;
  • Consumer support;
  • Governance; and
  • Management information.

While firms can be proportionate in their implementation, it should cover all relevant areas of their business even when there is a small number of retail customers. The FCA’s work indicates that many firms need to take additional action to fully embed the Duty, and they should do so without delay.  The FCA has also reminded firms that their boards must, at least annually, review and approve an assessment of whether the firm is delivering good customer outcomes which are consistent with the Duty. 

The FCA has given the sample firms individual feedback and will consider further action based on the seriousness of the implementation gaps and any harm to consumers.