The Consumer Duty came into force for open products on 31 July 2023.

In May 2023 the FCA sent a "Dear CEO" letter to SIPP operators which included the FCA's expectations of SIPP operators and how these will be enhanced by the Consumer Duty.  Key points raised included:

FCA's expectations re failings and complaints:

• the FCA's expectation that where SIPP operators identify systemic problems, they should proactively consider whether to give redress, or a proper opportunity to obtain it, to consumers who may have suffered detriment, but have not yet complained;
• the FCA's expectation that firms handling due diligence complaints will take account of guidance and recent decisions from FOS;
• the FCA's concern that some firms are not using realistic assumptions for the purposes of liability modelling to assess their potential liability in relation to complaints;

FCA concerns re lack of oversight of acts of discretionary investment managers and introducers

• the FCA's concern that SIPP operators are not carrying out adequate checks on investments made through discretionary investment managers (DIMs), are relying on DIMs to notify them of non-standard assets within the investment portfolio, and are not putting in place appropriate contractual arrangements with DIMs which deal with liability if the DIM makes investments that are prohibited by the operator;
• reiteration of the need to have effective oversight of introducers, with additional scrutiny of unregulated introducers;

FCA considers SIPP operators likely to be both manufacturers and distributors for the purposes of the Consumer Duty

• the FCA's view that SIPP operators are likely to be both manufacturers and distributors for the purposes of the Consumer Duty;

Importance of identifying target market and taking steps to avoid SIPPs with relatively high charges being distributed to those who would be better off with a simpler product 

• the FCA's expectation (under requirements to specify the target market) that SIPP operators take steps to avoid SIPPS being distributed to consumers who will not receive value from a SIPP because they do not need the extra flexibility offered by it and therefore derive no benefit in paying higher fees for such flexibility;
• that adviser and investment charges need to be taken into account when assessing whether a SIPP offers fair value;

FCA expectations re record keeping, compliance, and reporting issues to the FCA

• FCA concern at poor quality data regarding asset classification, with operators' records failing to classify assets or wrongly categorising them;
• concern that some SIPP operators' Consumer Duty plans are superficial, and that some are categorising themselves as only being administrators when the FCA considers them to be both manufacturers and distributors of products;
• SIPP operators can expect to be asked to demonstrate how they have taken the FCA's letter into account in their work plan;
• the FCA expects to be proactively informed by SIPP operators if their work done on the points covered in the FCA's letter results in remedial action or identification of harm.

In May 2023 the FCA also published the findings from its review into firms' approaches to fair value assessments under the Consumer Duty.  The FCA reviewed a sample of 14 fair value assessments, mainly from large firms within four portfolios (retail banking, consumer investments, payments and digital assets and consumer finance).  Areas for improvement identified by the FCA included the following:

• reliance on unevidenced arguments that a firm's business model or ethos is inherently fair value;
• insufficient thought to the distinction between "manufacturers" and "distributors";
• use of a single generalised template for assessing fair value where it was not clear how the template would apply to products with very different characteristics;
• insufficient consideration of whether information from other firms in the distribution chain was needed to properly assess fair value;
• an over-reliance on average outcomes with inadequate analysis to understand the full distribution of outcomes; and 
• inadequate plans for monitoring fair value.

At the end of June the FCA also published ten key questions for firms to consider in relation to Consumer Duty compliance.