FCA warns firms of ‘swift action’ if they ignore Consumer Duty
The City watchdog has alerted firms of the upcoming Consumer Duty deadline and warned that those who fail to comply will face swift action.
The new Consumer Duty comes into effect on 31 July and requires all regulated financial services firms to place customer wellbeing at the heart of their business model.
The new policy mandates firms to provide more clarity on their products and services, rather than burying key information in lengthy terms and conditions. Firms will be required to test and show that their communications are clear and that consumers are receiving good outcomes.
Read more: Consumer duty milestone approaches: Are P2P firms ready?
The Financial Conduct Authority (FCA) said today that it will be prioritising the most serious breaches and act assertively where it finds evidence of harm or risk of harm to consumers.
“Our supervisory and enforcement approach will be proportionate to the harm – or risk of harm – to consumers, with a sharp focus on outcomes,” said Sheldon Mills, executive director of consumers and competition at the FCA.
“In some cases, firms can expect us to take robust action, such as interventions or investigations, along with possible disciplinary sanctions.”
Mills also said that the Consumer Duty could boost the competitiveness of the financial services sector.
Read more: Half of lenders unprepared for new consumer duty
“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,” he said.
“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.
“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.”
The FCA will also be sharing its insights from its review of firms’ fair value assessment frameworks – which highlights good practice and areas for further consideration – to support firms in the future.
Peer-to-peer lending platforms have previously told Peer2Peer Finance News that they are ready for the deadline, arguing that many of these policies are already embedded in their businesses.
