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What happens on 31 July?

With the end of the month approaching fast, we can all be forgiven for focussing on the here and now, and not thinking what happens next? Yet if you can take a few moments to pause and do just that you gain perspective.

We're not all going to jail

Undoubtedly the worst reason given for compliance is well if you don't comply you will go to jail. That's just plain lazy explanations. So let's do this properly.

Jail time is for criminal offences. Criminal prosecutions are for the really bad actors - the fraudsters, the manipulators, the cartels, the thieves.

We're not all going to enforcement either

Is there a risk of enforcement action from the FCA after 31 July? Yes. As with any regulation the FCA will not be an effective regulator if it didn't pursue enforcement cases against firms who are non compliant.

Is FCA building out a consumer duty focussed enforcement team? Yes. They said as much in their 2023/24 Business Plan. Don't make the mistake of reading big teams = lots of cases, that's not necessarily the case with enforcement as some cases, especially around untested new rules can be complex to investigate and prosecute.

Why are they building out that team? FCA knows already there will be some enforcement action that will need to be taken. After all the whole point of new rules is to plug gaps that are being exploited. Plus there are always some individual's who are anti-regulation and will just refuse to engage.

Who are those firms? Well there will be some firms who are not taking the new Duty seriously. For example, they've made no effort to change anything, perhaps they are incorrectly thinking that they've done TCF or are already fair to their customers. The FCA will know who many of them are already, although the firms themselves may not have yet realised it.

We're not all going to be visited by FCA

FCA is not doing large numbers of onsite visits any more.

Onsite visits are time consuming and expensive, and so saved for specific issues or reviews.

FCA is becoming a data-led regulator and is doing as much as possible remotely because that allows it to operate more efficiently and effectively.

We must have written proof

FCA will know that vast majority of firms will be taking implementation seriously, because its your business, your clients, your reputation so of course meeting your commitments towards your customers is paramount. You want your response to form part of the good practice examples FCA will undoubtedly be publishing as we move closer to and beyond 31 July.

As many of you are discovering FCA will get in touch (probably by email) to ask a few questions and request evidence supporting your responses. You'll probably be given a short deadline, because FCA is looking to see what you've done so far.

So you need to be able to prove what action you have taken and when. Show how you decided what is or is not in scope. Consider how you will keep that up to date.

What happens after 31 July is very much in your hands. Talk to us if you're feeling uncertain or need reassurance.


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