Consumer duty is coming, FCA reminds industry
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As the deadline for complying with the new consumer duty is approaching on 31 July, the Financial Conduct Authority is calling on firms to ensure they are ready.
FCA executive director of consumers and competition Sheldon Mills warned firms on Wednesday that the regulator will take swift action on those who ignore the duty, saying its enforcement will be in proportion to the harm they could cause.
“We will prioritise the most serious breaches and act swiftly and assertively where we find evidence of harm or risk of harm to consumers. In some cases, firms can expect us to take robust action, such as interventions or investigations, along with possible disciplinary sanctions,” Mills said speaking at an event organised by consultancy EY.
He said the financial services industry has worked with the regulator on ensuring compliance with the new rules that put consumers at the heart of financial services.
“The 52m financial services consumers in the UK rely on the sector to deliver good outcomes, and should be even better protected from harm, particularly in these challenging economic times,” he said.
Mills argued that the Duty will help UK financial services stay competitive; his comments come as the FCA is set to receive a controversial new international competitiveness objective from parliament.
The FCA said it is sharing findings from its review of firms’ fair value assessment frameworks, which highlights good practice and areas for further consideration. It found that firms had carefully considered the FCA’s price and value requirements, but that some have more work to do to meet the rules.
The consumer duty introduces a consumer principle around the overall standard of behaviour expected from regulated firms, as well as ‘cross-cutting rules’ and four consumer outcomes relating to:
- the governance of products and services;
- price and value;
- consumer understanding; and
- consumer support.
Financial advisers and pension providers will be subject to the new rules. Research by provider Aegon published in April has shown that about a third of financial advisers expect to change the way they communicate with clients (34%), the way they assess the value of advice (33%), as well as the way they segment their client base and service offerings (28%).
Aegon has on Thursday launched three guides to help financial advisers comply with the consumer duty.
How will the consumer duty change the pension saver experience?
