The UK’s Financial Conduct Authority (FCA) has confirmed plans for a new Consumer Duty, which it claims will improve how firms serve customers.
It claims this will set a higher and clearer standard for consumer protection across financial services and require firms to put their customers’ needs first.
This Duty is composed of an overarching principle and new rules firms will need to follow. It means consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.
Firms will have 12 months to implement the new rules for existing and new products and services on sale. The rules will be extended to closed book products 12 months later.
This duty will end rip-off charges and fees, make it easier to switch and cancel products, provide helpful and accessible customer support that doesn’t make people wait so long for an answer that they give up, provide timely and clear information to people and more.
FCA executive director of consumers and competition Sheldon Mills said, “The current economic climate means it’s more important than ever that consumers are able to make good financial decisions. The financial services industry needs to give people the support and information they need and put their customers first.
“The Consumer Duty will lead to a major shift in financial services and will promote competition and growth based on high standards. As the Duty raises the bar for the firms we regulate, it will prevent some harm from happening and will make it easier for us to act quickly and assertively when we spot new problems.”
The Duty is part of the FCA’s effort to become a more assertive and data-led regulator, it said. With firms assessing how they’re meeting their customers’ needs, the FCA will be able to quickly identify practices that don’t deliver the right outcomes for consumers and take action before practices become entrenched as market norms.
The CEO of the Financial Conduct Authority (FCA) recently underlined that the regulator is investing heavily in data and technology to be more proactive against threats. He also called for the need for intensive dialogue between the UK and US, deepening ties on crypto-asset regulation and supporting the industry to prioritise ESG commitments.
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