Consumer duty: FCA's overhaul will force financial services companies to 'up their game'

What has been dubbed the biggest shake-up of UK retail financial services regulation for over 20 years came into force today.

The FCA has introduced stricter rules on value for money and fair pricing as it aims to bring about higher standards of consumer protection. 

The new rules, known as the consumer duty, means savers should expect:

• Helpful and accessible customer support, so it's as easy to sort out a problem, switch or cancel 

• Timely and clear information they can understand, so they can make good financial decisions; and means mportant information shouldn’t be buried in lengthy terms and conditions

• Providers must offer appropriate products and services, rather than pushing products and services savers don't need

• Products and services must provide fair value

• Firms to consider if someone is in a vulnerable situation, this could be due to poor health or financial troubles.

Andy Curran, chief executive of Standard Life, said consumer duty marked a "true step change". He said: "Of all the financial regulations that have come into force over the years, few have had the same potential to transform how the industry engages with customers.

 “It’s an opportunity for us to up our game and we’ve worked hard to do so from the hundreds of people that have ensured that our current suite of products are compliant with achieving good customer outcomes to thorough assessments to help us understand how we can raise the bar further to improve our service. 

“Consumer Duty coincides with us investing heavily in our service proposition and products and the support we provide to the customers, clients and the adviser community. It forms an integral part of our focus on providing customers with choice and greater certainty of outcomes.”

Helpful regulation

Romi Savova, chief executive of PensionBee, said: "As a pension provider that fights for the rights of savers, we welcome this new regulation from the Financial Conduct Authority. Our duty to consumers is well embedded in our approach to doing business and we hope the new consumer duty will improve standards for UK consumers, by offering all financial service providers a helpful framework to evaluate their services."

Suzanne Homewood, managing director, Moneyhub Decisioning said it saw the duty as a vital part of the lifecycle of customer engagement.

"Whilst the new rules are a huge step forward in ensuring that organisations set higher and clearer standards of consumer protection, putting customer needs first is a process that inevitably began long before today - and one that should extend indefinitely into the future.

"Whilst today’s official deadline is the green light for change, it's actually the power of the "permission" that the FCA is granting for organisations to use regulatory change to transform customer relationships, which should serve as a positive catalyst for opportunity and innovation, continuously improving outcomes for both organisations and customers alike."

Steven Cameron, pensions director at Aegon comments:“The 31st July milestone is the beginning, not the end. We can all expect continued scrutiny from the FCA which will be collecting data to review firms’ delivery. Adviser firms can expect an ongoing focus in areas such as the value of advisory services, the identification of target markets, clarity of communication and tailored support for customers with characteristics of vulnerability. 

“I also see the consumer duty continuing to evolve over time. The external environment will generate newly foreseeable harms for us to protect our customers from. And I’ve no doubt that FCA expectations will also develop, with the Duty sure to be referenced in every future policy paper, review and consultation from the FCA."

Read more:FCA's consumer duty reforms will shake up the pensions industry