The policy statement (PS22/9), final rules and final guidance (FG22/5) for the consumer duty came out in July 2022. There is one particular element of the FCA's approach that firms have been struggling with since then: the requirement that, by the end of October 2022, firms' boards "should have agreed on their implementation plans and be able to evidence they have scrutinised and challenged the plans to ensure they are deliverable and robust to meet the new standards".

Firms are questioning the level of detail and granularity that should be presented to the board. And unfortunately, in many cases, the approach they are taking is unlikely to be sufficient because it focuses too much on the plan and too little on the supporting documentation which needs to be provided with it. As the FCA notes, boards will be expected to provide scrutiny and challenge, and they are unlikely to be able to do that if they have merely been presented with a Gantt chart.

In preparing for the October deadline, those firms operating under the senior managers and certification regime (SM&CR) should also recognise that this process has the potential to attract personal liability for senior managers. A prudent board should treat this exercise as they would an attestation since they will be confirming that their implementation plan for the consumer duty is sufficient and deliverable.

As the FCA says in PS22/9:

So, if things were to go wrong in the future, the FCA is likely to use the sign-off as evidence of whether senior managers demonstrated "reasonable steps".

Therefore, it is important for firms to recognise that the actual implementation plan will be one element of the pack which will need to be presented for scrutiny and challenge to the board in October. The amount of material required will differ from firm to firm. There is no one-size-fits-all approach, but firms should consider including some or all of the elements listed in the sections below.

Firms relatively new to authorisation, or those with limited product lines, will find the scoping element a simple process. However, for others judgements will need to be made:

Scoping is a key step and will require careful consideration. If it is not done correctly, firms may find additional products to review too late into the process in 2023.

For a checklist to help firms assess which of their products and services the FCA's new consumer duty will apply to, see Checklist, Assessing firms' activities within scope of new FCA consumer duty.

The board should obtain a clear understanding of the consumer duty requirements for the firm, and what good outcomes will look like for their customers. This will require a clear assessment of PS22/9, the final rules and FG22/5 as they relate to the firm.

FG22/5, in particular, contains a range of questions which are very useful for assessing the FCA's expectations. For example:

Having assessed which products and services are in scope and the requirements of the consumer duty, a firm can then develop a gap analysis. This will highlight the areas where the firm currently falls short of the consumer duty standards and areas where uplift is required. This analysis will provide the board with clarity on the scale of the work required.

The presentation of the implementation plan is the core element of the submission to the board in October. Boards should expect to see detail at a sufficient level of granularity to give them confidence that all the requirements will be addressed. This is based on the agreed in-scope areas of the business, the understood requirements of consumer duty and the assessed gaps within the business.

The board should challenge the business and seek evidence that the plan is achievable within the timeframe and that all elements have been included. For example:

The pack presented to the board should have clarity on the allocation of roles and responsibilities, both for the delivery of the project and for governance and oversight. The delivery will largely be the responsibility of the first line of defence, with senior management in operations overseeing and directing the work of subject matter experts. But there should be clarity on who will be undertaking oversight and monitoring too.

To support effective governance and oversight, the FCA expects firms to appoint a consumer duty champion (likely to be an independent non-executive director), who will work with the Chair and the CEO to ensure sufficient time and focus is given to implementing the consumer duty. However, the appointment of a consumer duty champion does not remove the expectation that the rest of the board and senior management have their responsibilities too. And equally, it would not normally be expected that the champion would be the senior manager sponsoring the project. That role may be better suited to the senior manager in the first line.

When considering roles and responsibilities, firms should also be mindful of the SM&CR requirements. In particular that:

Boards should seek assurance that the people given responsibilities to deliver the project have the capacity and capability to achieve the requirements. Assessment of capacity should give fair consideration to the existing BAU workload the staff have. This may result in a need to curtail or postpone existing planned projects to free up capacity.

In addition to capacity and capability, there is also the intangible element of culture: do personnel involved in the project have the right attitude and inclination to successfully deliver consumer duty?

Within the presentation to the board, there should be an honest articulation of the project risks and the dependencies required to deliver success. No project is undertaken without risk, and boards should challenge the plan if there is insufficient consideration of what might go wrong and how this can be mitigated. Risks can occur across all areas of the project, but there should be a key focus on areas such as scoping, capacity and capability, and embedding.

The project governance framework should be fully articulated. It should be clear from the plan who will be responsible for reviewing and signing off the project milestones, and also what regular updates the board and senior management will receive during the project. As the FCA says, boards "should maintain oversight of the implementation work to ensure it remains on track and meets the standards of the duty".

Achieving this will require a framework of updates, RAG statuses and risk management information (MI), to enable stakeholders to be kept informed on progress and to have the necessary information to initiate corrective action if it is required.

Equally, there should be clarity on what sign-off is required for the completion of the individual workstreams and the overall project. It should be clear which elements require board sign-off and which can be delegated to functional heads in the business.

An implementation plan will be insufficient if it does not consider how the changes will be embedded in the firm. There is a clear expectation from the regulator that the consumer duty will become a firm's BAU approach to ensuring good outcomes for retail customers. Therefore, the firm's implementation plan should demonstrate how this will be achieved.

The focus of the embedding activity will predominantly be within the operational areas. However, firms should also consider what other changes may be required. For example:

Firms differ in size and complexity, but all firms should recognise that the 31 October deadline is a significant milestone. In submitting the implementation plan, due consideration should be given to ensuring the board can evidence that they have given the appropriate consideration of the risks and made an informed decision regarding the adequacy of the plan.