The UK’s Financial Conduct Authority has revealed plans for a new Consumer Duty, which will set a higher level of consumer protection in retail financial markets.
The Consumer Duty, which firms will have to follow or face action including enforcement investigations, will have 3 key elements:
While companies are already bound by FCA rules and principles to treat customers fairly, the FCA says it has seen evidence of practices that cause consumer harm, including firms providing information which is misleadingly presented or difficult for consumers to understand, hindering their ability to accurately assess the product or service.
In a recent FCA survey, one quarter of respondents said they lacked confidence in the financial services industry and only 35% agreed that firms are honest and transparent in their dealings with them.
The new Duty aims to drive a shift in culture and behaviour for firms,
Sheldon Mills, executive director of consumers and competition at the FCA, said: 'The package of measures we are proposing will enhance our existing rules and is designed to tackle the harms we see in financial services markets, and their causes, as well as put consumers in a stronger position to make good decisions.
'We want firms to be putting themselves in the shoes of consumers and asking, ‘would I be happy to be treated in the way I treat my customers?’. We want consumers to be able to advance their financial wellbeing and build positive futures for themselves and their families.'
The consultation is open for comment until July 31, 2021.
It will be followed by a second consultation, with the new Consumer Duty introduced in July 2022.
The FCA is also consulting on the potential benefits of attaching a private right of action to the new Duty.
Visit https://www.fca.org.uk/publications/consultation-papers/cp21-13-new-consumer-duty for more details and to respond to the consultation.