The Financial Conduct Authority (FCA) has confirmed plans to bring in a new Consumer Duty, which it says  ‘will fundamentally improve how financial firms serve consumers’.

It will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.

What’s changing?

The Consumer Duty is made up of an overarching principle and rules firms will have to follow.

It will mean that you should:

• Receive communications you can understand
• Get products and services that meet your needs and offer fair value
• Get the customer support you need, when you need it.

More specifically, the Consumer Duty will include requirements for firms to:

• End rip-off charges and fees
• Make it as easy to switch or cancel products as it was to take them out in the first place
• Provide helpful and accessible customer support, not making people wait so long for an answer that they give up
• Provide timely and clear information that people can understand about products and services so consumers can make good financial decisions, rather than burying key information in lengthy terms and conditions that few have the time to read
• Provide products and services that are right for their customers
• Focus on the real and diverse needs of their customers, including those in vulnerable circumstances, at every stage and in each interaction.

Sheldon Mills, executive director of consumers and competition at the regulator, said: “The Consumer Duty will lead to a major shift in financial services and will promote competition and growth based on high standards. As the Duty raises the bar for the firms we regulate, it will prevent some harm from happening and will make it easier for us to act quickly and assertively when we spot new problems.”

Peter Tutton, head of policy, research and public affairs at debt charity StepChange, added that the Consumer Duty could be a ‘game-changer’.

He said it would require firms to “think beyond compliance box ticking and embedding a far richer focus on preventing harm and delivering good outcomes for consumers”.

The regulator is giving financial firms 12 months to implement the new rules.