FCA update: New Consumer Duty 2022
The Financial Conduct Authority (FCA) has announced that it intends to implement a new Consumer Duty that would significantly enhance how businesses interact with customers. It would establish stricter guidelines for consumer protection across all financial services and mandate that businesses put the needs of their clients first.
What does the new duty consist of?
The Duty consists of a broad philosophy and new requirements that businesses must abide by. It will imply that customers should receive messages in a language they can comprehend, goods and services that satisfy their demands and are reasonably priced, and the customer support they require at the time of need.
It should be easier for businesses to compete and innovate in the best interests of consumers if we are clear about our expectations and businesses concentrate on what their customers need.
Why?
The Duty is a component of the FCA’s evolution into a more forceful and data-driven regulator. The FCA will be able to rapidly identify activities that don’t achieve the correct outcomes for consumers and take action before competitors do so thanks to firms evaluating how they’re satisfying their customers’ demands.
Making wise financial decisions is more crucial than ever for consumers in the current economic scenario. People should receive the assistance and information they require from the financial services sector, which also needs to prioritise its clients.
“The Consumer Duty” will bring about a significant change in the financial services industry and encourage competition and growth based on high standards. The Duty will make it easier for us to respond swiftly and adamantly when we discover new issues since it increases the bar for the businesses that the FCA supervise.
The Duty will include demands that businesses:
- Terminate rip-off charges and fees and make it as easy for customers to switch or cancel products as it was to take them out in the first place
- To provide helpful and accessible customer support, not making people wait so long for an answer that they give up
- Instead of burying important information in lengthy terms and conditions that few people have the time to read, businesses should provide timely and understandable information about their products and services so that customers can make informed financial decisions.
- Businesses should also strive to create goods and services that are suitable for their target market by focusing on the diverse and real needs of their clients, including those who are in vulnerable situations, at every stage and in every interaction.
The FCA is providing businesses 12 months to apply the new regulations for all currently on the market goods and services, both new and old. To allow businesses additional time to bring older, no longer-on-the-market items up to the new requirements, the restrictions will be extended to closed book products 12 months after their first implementation.
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Reference list
FCA. (2021). PS22/9: A new Consumer Duty. [online] Available at: https://www.fca.org.uk/publications/policy-statements/ps22-9-new-consumer-duty#:~:text=A%20new%20Consumer%20Principle%20that [Accessed 2 Aug. 2022].
Grant Thornton UK LLP. (2022). What does the FCA Consumer Duty mean for firms? [online] Available at: https://www.grantthornton.co.uk/insights/what-does-the-fca-consumer-duty-mean-for-firms/ [Accessed 2 Aug. 2022].
PricewaterhouseCoopers (2022). The FCA’s new consumer duty: Raising the bar on consumer outcomes. [online] PwC. Available at: https://www.pwc.co.uk/industries/financial-services/regulation/understanding-regulatory-developments/fca-proposes-new-consumer-duty-in
