FCA Confirms New Consumer Duty for Financial Services

The final Consumer Duty guidance published this week by the FCA will be taking a data-first approach to supervision requiring firms to demonstrate, not only that they have control processes and frameworks in place, but that they're effective and aimed at setting higher and clearer standards of consumer protection across financial services. The guidance also requires firms to focus on delivering good customer outcomes.

Firms with open books or new products have until 31 July 2023 to implement the rules and for closed book products firms have until 31 July 2024, an extra 12 months, to ensure legacy books come up to the standards of the new rules.

This will be a significant shift in culture and mindset for firms, focussing on four key areas:

1) Products and services
2) Price and value
3) Consumer understanding
4) Consumer support

“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,” said FCA executive director of consumers and competition Sheldon Mills.

“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.”

https://www.fca.org.uk/news/press-releases/fca-consumer-duty-major-shift-financial-services