Last week we responded to the FCA’s consultation on bringing in a new Consumer Duty that would set higher standards for how financial services firms treat their customers.
The proposed Consumer Duty would require providers to act in the best interests of their customers and strive to deliver good outcomes for them. It aims to improve the quality of firm communications and customer service, enable better designed products, and deliver better value for customers.
Our response sets out our support for the Duty, which we believe has the potential to create a fairer financial system where more people are able to access products and services that are appropriate to their needs.
We also highlight several issues the FCA should consider as it progresses this work
- We believe that the Consumer Duty should have an explicit focus on improving the financial wellbeing of consumers
- Firms will need more detailed guidance and support to successfully interpret and implement the Duty, in order for its benefits to be properly realised
- Crucially, the FCA should ensure that the higher standards placed on firms do not lead them to feel that they can’t sustainably serve customers in vulnerable circumstances. The introduction of the Duty needs to be accompanied by measures to increase provision to this group. Our recommendations include that the FCA should establish a ‘market development incubator’ to support the development of products and services for people in vulnerable circumstances.