FCA to Introduce New Consumer Duty to Drive a Shift in Industry Mindset
- Data Protection , Authentication Technology
- 07.12.2021 02:15 pm
- New plans from the FCA will ensure a higher standard of consumer protection for users of financial services.
- Today’s consultation takes on board feedback from and engagement with the industry and consumer groups following initial proposals published in May.
- It sets out more developed proposals for new rules which will require firms to focus on supporting and empowering their customers to make good financial decision and avoiding foreseeable harm at every stage of the customer relationship.
- Firms will have to review their products and services against this new standard and the consultation period gives providers the opportunity to engage with the FCA as the details are worked through.
Comment below, attributable to Anne Fairweather, Head of Government Affairs and Public Policy:
"The FCA is right to zero in on the responsibility that the financial sector has in supporting consumers in their consultation on a new Consumer Duty. This new approach, focused on consumer outcomes, is very welcome.
An ambitious deadline of April 2023 has been set but, paired with the iterative approach they’ve outlined in today’s announcement, there should be time to iron out wrinkles in the framework. As always with wide ranging reform, this will prove contentious in some quarters, especially with headline costs up to £2.4bn being quoted.
However, there’s a missed opportunity when considering the benefits of greater personalisation in communications. The power of data hasn’t yet been fully harnessed here – more could be done to support consumer understanding. The advice/guidance boundary gets in the way of our ability to engage our clients using targeted messaging and guiding them to better outcomes.
The Consumer Duty offers the opportunity to look beyond the current, rigid advice boundary and instead judge the value firms provide based on the outcomes they drive for consumers. We’ll continue to make the case for the benefits that more personalised guidance could bring to the millions who are left unadvised in the current system.”