In general, the Duty will be more successfully implemented by those firms that best embed it into their culture. The FCA expects firms to implement the substance of the Duty and several requirements should help this shift, such as the annual assessment, the appointment of a Duty Champion and the reflection of the Duty in the Senior Managers and Certification Regime.
Firms might want to consider the scope and reach of the Duty for those customers that might remain just outside its scope, with Buy-Now-Pay-Later (BNPL) products being one pertinent example. The FCA has signalled its concern that some of these products, and the way they are promoted and sold, might be putting customers at risk of harm. Reflecting this concern, the Government looks set to press ahead with its plans to bring BNPL products within the remit of the FCA and started consulting on proposed legislative changes in October.3
In the meantime, the FCA has stressed that all firms distributing BNPL products need to have their related financial promotions approved by an FCA-authorised firm. Given that many banks have launched their own BNPL products, they may want to consider how the Duty and other conduct risk responsibilities should apply to these and other unregulated products (for instance around payments or unregulated digital assets) regardless of whether, technically, they remain outside the regulatory perimeter for now. Can the Board justify a lower standard of protection for BNPL and similar customers, compared to customers who hold a regulated product with the same firm? And even if the Board can satisfy itself on this point, does it make operational sense to run two levels of consumer protection with the associated compliance complications (and costs) this entails?