The Financial Conduct Authority (FCA) has again warned firms to be prepared for the incoming Consumer Duty regulation.
The rules, which aim to provide greater protection for consumers, will come into effect on 31 July.
Sheldon Mills (pictured), FCA executive director of consumers and competition, warned that firms which ignore the requirements can expect robust action to be taken against them, with the regulator ready to act “swiftly and assertively” where they find risk of harm to consumers.
The FCA has also highlighted four areas for the industry to focus on following its review of firms’ fair value assessment frameworks. They include:
- – Collecting and monitoring evidence that demonstrates that products and services represent fair value
- – Clear oversight and accountability of the necessary remedial actions if they do not provide fair value
- – Where relevant, ensuring sufficient analysis of the distribution of outcomes across groups of consumers in the target market, beyond broad averages, to demonstrate how each group receives fair value
- – Summarising and presenting fair value assessments in a way that enables decision-makers to robustly discuss whether the product or service represents fair value, such as by being clear on any limitations in the analysis or evidence
Despite the warning, Mills praised the financial services industry for the work firms had undertaken so far to prepare for the incoming regulation.
Mills said: “Since we published our final rules and guidance in July last year, the financial services industry has worked with us to meet Parliament’s will to implement the new Consumer Duty. The 52 million financial services consumers in the UK rely on the sector to deliver good outcomes, and should be even better protected from harm, particularly in these challenging economic times.
“The duty will help the UK financial services industry remain world-leading proponents of financial services, as firms have to think harder about innovating and competing to find better ways to serve customers. If applied correctly by firms, the Consumer Duty should help firms retain and attract customers and will enhance the competitiveness of our financial services sector.”
He added: “The duty will mean that consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.”
See also: City minister Andrew Griffith hits out at Consumer Duty