THE Finance Conduct Authority has issued a new Consumer Duty which sets the guidelines for finance sales by brokers to consumers and small businesses. The new Consumer Duty document sets “higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first”, according to the FCA.
A spokesman for the FCA added the new Duty will “fundamentally improve how firms serve consumers”.
Issued this morning (27 July 2022) the Consumer Duty majors on “good outcomes” rather than setting out prescriptive regulations.
In the document, the FCA describes how it wants finance providers and brokers to develop their own tests and monitoring systems to ensure good outcomes for consumers.
It suggests these would have to include having a board-level director responsible for championing best practice in finance sales and having documentation ready to be viewed, should the FCA investigate. However, these records would not have to be made public.
The FCA has given operators 12 months until the end of July 2023 to make sure they are compliant with the new Consumer Duty for existing products and a further 12 months for closed book products.
Sheldon Mills, Executive Director of Consumers and Competition, said:
“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.
“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.”
The FCA claims the Duty will also end rip-off charges and fees, make it easier to switch or cancel products, make firms provide helpful and accessible customer support, provide timely and clear information so that customers can make good financial decisions and provide products and services that are right for customers.
Tristan Young is an award winning journalist with more than 25 years’ experience reporting on the automotive industry focussing predominantly on fleet and retail. As a self-confessed petrol-head, Tristan has a weakness for car classifieds. When he’s not writing about the automotive industry, he can usually be found outdoors with a small pack of border collies.