FCA confirms plans for new Consumer Duty

This will see the regulator set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first. It will be made up of an overarching principle and new rules firms will have to follow. 

This means consumers should receive communications they can understand, products and services that meet their needs and offer fair value. They should also get the customer support they need, when they need it.  

The new duty will require firms regulated by the FCA to end rip-off charges and fees, make it as easy to switch or cancel products as it was to take them out in the first place and provide helpful and accessible customer support. 

They will also need to provide timely and clear information that people can understand about products and services so consumers can make good financial decisions, provide products and services that are right for their customers and focus on their real and diverse needs. 

It forms part of the FCA’s transformation to becoming a more assertive and data-led regulator, meaning that it will be able to quickly identify practices that don’t deliver the right outcomes for consumers. 

Commenting on the news, the FCA’s 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.”

Responding to the announcement, StepChange Debt Charity head of policy research and public affairs Peter Tutton said: “We’re pleased that the FCA’s final decisions on implementing the new duty will embed these objectives even more fully than in the original consultation. 

“This valuable cultural shift will have consequences not just for regulated firms but also for the FCA itself, and we look forward to working constructively across the credit market to help support it.

"With the FCA now putting greater emphasis on embedding true accountability within firms and monitoring outcomes, financial services consumers will in future be better protected from harm, including the risk of reasonably foreseeable debt problems or product features that exploit them. 

“In the meantime, it’s worth remembering that paying due regard to a customer’s circumstances has always been the regulator’s expectation of firms; the implementation period should be seen as an opportunity to bolster good practices and culture.”

The FCA is giving firms 12 months to implement the new rules for all new and existing products and services that are currently on sale, with this being extended to closed book products 12 months later. This has been done to give firms more time to bring these older products up to the new standards.