Urgent Action Needed as Consumer Duty Deadline for Closed Books Looms

With over 1 month until the 31 July 2024 implementation deadline, financial services firms must accelerate their preparations to apply the Consumer Duty to closed products and services. The FCA has issued sector “Dear CEO” letters outlining priority areas and reinforcing its expectations for compliance by the critical date.

The overarching message is clear – firms need to ensure they can demonstrate they are acting to deliver good customer outcomes across their entire closed book business when the Duty comes into full force on 31 July. The FCA will be prioritising the most serious breaches and is prepared to act swiftly and assertively against any non-compliance causing customer harm.

While the fundamental requirements of the Duty apply across sectors, the FCA’s communications highlight some key nuances that firms should prioritise based on their specific products, services and customer base.

Customer Data Gaps

A recurring issue raised is gaps in customer data, which can impair a firm’s ability to understand outcomes and identify harm for specific customer groups. This is expected to be particularly acute for older closed books. Firms must take concrete steps to enhance data, cleanse records and find alternative ways to assess outcomes where gaps remain.

Fair Value Assessments

Applying fair value assessments consistently to closed products is a crucial priority. By 31st  July, firms must ensure there is a reasonable relationship between the price customers pay and the benefits they receive on an ongoing basis, even for legacy contracts pre-dating the Duty.

Support for Vulnerable Customers

With around half of UK adults showing characteristics of vulnerability, the FCA expects firms to have robust processes to identify and flexibly support vulnerable customers holding closed products. This includes offering alternative communication channels and tailoring approaches.

For life insurers and consumer credit firms, gaps in vulnerability data and inconsistent customer support are highlighted as key challenges to urgently address.

Gone-Away Customers

For long-standing closed books, locating unresponsive or gone-away customers and determining the appropriate course of action is an acute issue that could lead to harm if not remedied. Firms should enhance tracing efforts and establish clear procedures.

Vested Contractual Rights

While not requiring relinquishment of vested rights like exit fees, the FCA expects firms to consider alternative actions to prevent customer detriment arising from closed products where such rights exist.

The regulator has set out clear prompts and areas for firms to prioritise based on its observations of current practices and areas of weakness. With the implementation date imminent, boards and senior management must ensure their firms have taken the necessary steps and put in place mitigating actions where full compliance has not yet been achieved.

How Complyport Can Help

At ComplyPort, our regulatory experts stand ready to support financial services companies in meeting the stringent Consumer Duty requirements across all products and customer journeys, including closed books. Contact us today to discuss tailored solutions to accelerate your implementation efforts and minimise risks of non-compliance penalties.

Our offerings include:

  1. Online Implementation Readiness Assessment:
  • Utilise our user-friendly online questionnaires to demonstrate consideration for Consumer Duty and identify gaps and areas for improvement. This assessment serves as a foundation for developing an effective implementation plan.
  1. Consumer Duty Service package:
  • Benefit from a holistic package that encompasses various elements, such as:
    • Diagnostic assessment to determine the applicability of Consumer Duty.
    • Report Templates to streamline your documentation process.
    • Working Papers and relevant rules to ensure compliance.
  • Choose from our suite of meticulously designed policy templates, including:
    • Product Assessment Policy
    • Consumer Duty Working Papers (client version)
    • Consumer Duty Monitoring (client version)
    • Fair Value Assessment Policy
    • Consumer Duty Diagnostic Assessment
    • Consumer Duty Annual Report
  1. Consultancy Services:
  • Access contracted and ad hoc consultancy support, both pre and post-implementation deadline. Our experts will assist you with regulation interpretation and address any personal queries, providing you with peace of mind throughout the process.


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