The UK's Financial Conduct Authority (FCA) proposes to introduce a new ‘Consumer Duty’, that would set higher expectations for the standard of care that firms provide to consumers. For many firms, this would require a significant shift in culture and behaviour, where they consistently focus on consumer outcomes, and put customers in a position where they can act and make decisions in their interests.
The Consumer Duty would require firms to:
- ask themselves what outcomes consumers should be able to expect from their products and services
- act to enable rather than hinder these outcomes
- assess the effectiveness of their actions
In essence, the Financial Conduct Authority wants to see firms putting themselves in their customers’ shoes, asking themselves questions such as ‘would I be happy to be treated in the way my firm treats its customers?’, or ‘would I recommend my firm’s products and services to my friends and family?’.
The Consumer Duty would add to the range of regulatory tools the FCA uses to make markets work well. Bringing together both consumer protection and competition objectives, it would help create an environment where consumers are better equipped to achieve good outcomes from financial services. To enable this, firms need to ensure that their products and services are fit for purpose and offer fair value, and that their communications and customer service enable consumers to make and act on well-informed decisions.