The new Consumer Duty issued by the UK’s financial regulatory body, The Financial Conduct Authority (FCA), has come into force on 31st July 2023 and aims to offer higher levels of protection in retail financial markets.
Crucial for customers: FCA debuts Consumer Duty
The Consumer Duty rules relate to four consumer-focused outcomes, these being:
- Products and services.
- Price and value.
- Consumer understanding.
- Consumer support.
In May 2023, the FCA’s financial lives survey found that 14% of UK adults who held one or more financial products had unsuccessfully attempted to contact their financial service provider. The 7% of adults who received a reply from their provider did not find the reply helpful or topical. Likewise, 59% of financial service users did not have confidence in the UK financial service industry.
As a result, the FCA’s new rules, first outlined in the ‘Finalised Guidance for Firms on the Consumer Duty for 2022’ stated that the new rules would apply to all firms involved in the ‘distribution chain’ of manufacturing, provisions, sale, and administrative management.
This means consumers will have more support, more communication, and more products and services at fairer prices; however, it is up to companies to formulate how this is provided. Consumer Duty also works to create transparency in the financial retail markets by ensuring consumers have access to accurate company data, which can result in better financial decisions.
The FCA has stated that this area of consumer support will be monitored regularly because of the autonomy companies have when providing the four consumer-focused outcomes. Consumer Duty comes two years after the FCA’s Crypto policy statement, which indicated that all UK crypto firms are required to submit yearly financial crime reports.
According to data from the FCA, only new and existing products or services that are open to sale or renewal will need to adhere to the rules from today; closed products have until 31st July 2024 to adhere to the rules.
