Starting 31st of July, consumers can sit back, relax and enjoy higher customer privileges as the new rules for consumer protection come into effect. For those who are struggling to meet mortgage payments, gas or electricity bills, this is excellent news.
Although some firms have been anticipating the changes for a long time, and then there are those who claim they’ve been customer-centred anyway, the fact that about 36% per cent of UK adults trust financial services and providers is more than evident.
This is by far the most considerable change in the financial sector in two decades. And the timing couldn’t be better.
The new rules that have been introduced seek to protect consumers by improving value for money and more transparency. Which means those offering financial products to consumers must focus on delivering good outcomes for their customers.
Here we take a better look at the new regulations.
Consumer duty and the new rules explained
The Financial Conduct Authority’s Consumer Duty regime sets higher and clearer standards of consumer protection across financial services. With the new Consumer Duty, customers can expect:
- A higher standard of customer support
- Fair-priced products and services
- Transparent information from the outset
- Products and services that meet the customer’s needs instead of being upsold or sold products they don’t need
In short, the new regulations could mean that poor customer service, scams, and rip-offs may be a thing of the past.
How will the new regulations affect companies
The new rules apply to “all firms who determine or have a material influence over customer outcomes”. Not just those with a direct customer relationship. This means that businesses like investment and insurance firms, banks, building societies and the like are required, from now on, to put their customers’ needs first, no matter what.
Companies will not only have to ensure their customers receive fair and transparent treatment, but they will also have to provide evidence that they’re doing so. Namely, firms have to show proof that they:
- offer products and services that align with the customer’s needs
- prevent harm to consumers
- provide transparent information about their products and service, contracts, and terms and conditions
- helps consumers make the right financial decision without upselling unnecessary goods and services
- Offer unbiased advice and support consumers’ financial goals
- consider and respect customers’ varied needs, including vulnerable situations such as poor health and financial issues
- offer helpful customer support (meaning it should be as easy to cancel and return a product as it was to purchase one)
Companies must take appropriate actions to prevent misconduct. If they fail to comply with the new regulations, they could be closely investigated and face disciplinary measures and sanctions. Given the fact that many companies had a relatively short implementation timeframe, they are likely to have a compliance issue.
Should a company fail to meet these standards or comply with the new regulations, consumers can raise a complaint with the company. If the consumer is still not satisfied with the outcome and the company’s response, they can address the issue with the Financial Ombudsman Service.
Takeaway
In time we hope that these new changes will lead to a more trustworthy financial system. In the meantime, we hope it will reduce a significant amount of stress for many people.
It’s only a matter of time before your firm will be impacted by the new rules and guidance. If you are not sure you have correctly implemented the new Consumer Duty regulations, don’t hesitate to contact us. We can help review your progress and identify gaps before it’s too late.