The Financial Conduct Authority (FCA) says a major overhaul of its rules will tackle some of the biggest frustrations held by consumers. Under the new ‘Consumer Duty’, it should take customers no longer to make a complaint than to be sold a product.
The FCA is updating its rules relating to the treatment of customers, to focus on clarity and value, including ending long waiting times on the phone and rip-off fees.
What do the new rules involve?
The changes are a rewriting of some of the FCA's existing rules for the 60,000 financial companies that it regulates. These cover a range of sectors including banking and insurance. But they don’t include ‘buy now, pay later’ services and cryptocurrency businesses. In particular, there is a requirement that companies provide products that meet their customers' needs, and ensure adequate support is provided as and when people need it.
The FCA have said that financial firms would need to collect, and be judged on, data that includes:
- ensuring key information is not buried in lengthy terms and conditions
- focusing on diverse needs of customers, particularly vulnerable people
- making it as easy to switch or cancel products as it is to buy them in the first place, without "hiding behind chatbots"
- customers not waiting so long on the phone to customer services that they give up altogether
must abide by the rules for new and existing products by the end of July 2023,
but for older (often more complex) products no longer for sale, the rules won’t
be fully implemented until the end of July 2024.
What do the experts say?
Sheldon Mills, executive director of consumers and competition at the FCA 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."
He denied that the new rules were an admission that current regulation failed to keep up with new developments, and said that the impact of the new Consumer Duty should be felt by consumers through greater confidence that they were being dealt with fairly.
Matthew Upton, director of policy at Citizens Advice said: "Customers should get good service at a fair price. Yet time and time again we see firms overcharging loyal customers, selling poor products and making it tricky for shoppers to make careful, informed decisions. In a fast-changing world, it's harder than ever for regulators to adapt and protect consumers.”
"We support the Consumer Duty, but the wait for it shouldn't be seen as a green light for firms to play fast and loose with customers while they can."
Darren Bugg, Editor of The Customer
Service Blog said: “All of the new rules are to be welcomed, but the important
question is whether they will actually be enforced. I am especially interested
to see whether the rules will be enforced relating to phone waiting times, and
the time it takes to make a complaint.”
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