The UK’s Financial Conduct Authority (FCA) published new guidelines & rules regarding Consumer Duty last year. The new FCA regulations aim to help the retail market to create a higher standard of consumer protection. This will certainly reduce the amount of harm that most retail customers get.
According to the FCA, many financial firms now understand and support the objectives of Consumer Duty. This claim is based on the FCA’s recent review of a sample of certain financial firms’ implementation plans. The FCA noted that it acknowledges and welcomes the work the firms are doing to comply with Consumer Duty.
Certain financial firms lag in planning and may struggle to apply Duty – FCA
There’s no denying that many firms are now embracing FCA regulation of Consumer Duty. However, some firms are still very far behind in their planning. While the implementation is still 6 months away from being implemented, the FCA revealed that certain firms still lag in their planning. These financial firms may struggle to apply Consumer Duty once it becomes implemented in the coming months, the regulator mentioned.
Here’s a brief of what the appointed representative FCA on consumers and competition Sheldon Mills said below:
“Given the scale of the reform, we recognise that some firms need to make significant changes. For firms which are further behind in making the necessary changes, there is time to put that right and for them to show they are acting in the spirit of the new Duty. Firms will also see the benefits of the Duty, with increased trust in the sector, more flexibility to innovate, and in time, fewer rule changes.”
What exactly do financial firms need to focus on going further?
According to the FCA, firms that are further behind still have enough time to adjust and plan their duty accordingly. Speaking of proper planning, the regulator says the best way to go about it is for firms to focus on the following factors:
- The FCA said firms should use the remaining six months to prioritise Duty. They can do this by focusing more attention on areas that’ll help them better deliver good customer outcomes.
- Another important thing is that financial companies need to focus more on making much-needed changes. These changes should help consumers receive communications that they understand. It should also centre on helping the consumers to get products or services that suit their needs.
- Now is the time for financial firms to collaborate with their commercial partners. This collaboration should focus more on sharing relevant information and ensuring the delivery of good customer outcomes.
How does Consumer Duty benefit clients and firms?
Consumer Duty is a two-way thing, as it benefits both retail customers and financial companies. After implementation, the retail customers will get some reassurance that firms now have them in mind in everything they do. Financial firms only need to put customers in mind, providing them with enough information and guidance needed to make well-informed decisions.
Of course, “FCA treating customers fairly with Consumer Duty” isn’t the only interesting thing here. In addition, firms will also stand to gain from Consumer Duty. According to the regulator, the new FCA regulations for Duty will help businesses gain “increased trust in the sector.” In addition, the regulations will also provide firms with more flexibility to come up with better innovations.