Jessica joined RWA in 2018, having graduated with a First Class Honours degree in Film Studies. Her role as a content designer involves developing new and engaging e-learning modules as well as assisting in the creation of articles for Insight.
The Consumer Duty is here – Are firms prepared?
This week, the new Consumer Duty came into force in what is described by Biba Chief Executive Graeme Trudgill as “one of the most significant pieces of regulation there has been”. For financial service firms, this will be the biggest shake-up in regulation for over a decade.
Under the new rules firms will be required to act in good faith towards retail customers, avoid foreseeable harm, and enable and support retail customers to pursue their financial objectives. The Duty is applicable for new and existing products and services that are open to sale or renewal. Rules for closed products and services are expected to come into force next year on 31 July.
Now that the deadline has finally been and gone, we can finally stop talking about it, can’t we?
Certainly not. Since the first announcement of the new rules back in 2021, the FCA has repeatedly stressed that the implementation of the Consumer Duty should not be considered a one-off exercise that gets completed and then forgotten about.
Firms should now be regularly monitoring operations to determine that products and services have been designed with their customer’s needs in mind. Considerations should also be taken for how to adapt communication channels, particularly for customers with vulnerable characteristics. Changes in line with the new rules should be driven from the top, and the FCA has emphasised that it will be holding firms, including senior managers and boards, accountable for the delivery of good outcomes for consumers.
The implementation of the Consumer Duty is both a necessary and an ideal one, at a time when many UK households are struggling financially with the rising cost of living. The most recent Financial Lives survey reported that less than half of UK adults (approximately 21.9 million people) had confidence in the financial services industry, whilst just 36% agreed that most financial firms were honest and transparent in the way they were treated. The launch of the new rules will be a welcome change in how customers should be supported through this difficult time.
Change under the new rules is going to be gradual, and not one that happens overnight. Whilst many firms were already implementing changes long before the deadline, there were still a few concerns that a select few would not be prepared in time. It is going to be interesting to see how firms are responding to the rules over the next few months.
In case you missed it, we have extensively discussed the Consumer Duty in our past articles throughout the year. To delve deeper into these topics, you can click here. to view them again.
Users of the Development Zone can also find a range of Consumer Duty courses in their course catalogue, including:
- Consumer Duty – An Introduction
- Consumer Harm: Identification, Prevention, and the Consumer Duty
- Customer Service: The Channels of Communication
For those not currently using the system, you can find out more and request a free 14-day trial here: https://mydevelopment.zone/#getStarted