The FCA has introduced a new Consumer Duty, which fundamentally improves how firms serve consumers. It will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.
The Duty is made up of an overarching principle and new rules firms will have to follow. It will mean that 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.
The Consumer Duty forms part of the FCA’s transformation to becoming a more assertive and data-led regulator. With firms assessing how they’re meeting their customer’s 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 main areas of change we will experience will be:
- A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers
- Cross-cutting rules providing greater clarity on our expectations under the new principle and helping firms interpret the four outcomes
The four improved outcomes the FCA want to see from the Consumer Duty relate to:
- Products and service
- Price and value
- Consumer understanding
- Consumer support
These represent key elements of the firm-consumer relationship which are instrumental in helping to drive good outcomes for customers.