Consumer dutyFeb 13 2023

Consumer duty: FCA provides clarity on support outcome

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Consumer duty: FCA provides clarity on support outcome
The consumer duty rules will come into force in July 2023
ByJane Matthews

The Financial Conduct Authority has given more clarity to firms about what it expects of them in relation to the consumer support outcome of the consumer duty.

The consumer support outcome aims for firms to provide a level of support that meets the needs of consumers throughout their relationship with a firm.

Speaking to Ozge Ibrahim on the Inside FCA podcast, Sean Cafferky, a member of the regulator’s policy team said that this essentially means that the regulator wants to see “consumers get the support they need, when they need it”.

“I’m sure everyone’s experienced poor customer service at one point or another,” Cafferky said.

“For some it’s an inconvenience but for others, particularly consumers who need more help, battling through poor support can be really time consuming and a significant source of stress. And more than that, it can cause real harm where it means consumers can’t properly use their products.”

Cafferky said what the FCA wants to see is firms provide the support that enables consumers to use and enjoy the full benefits of the products and services they buy.

Positive friction might include things like risk callings or additional steps designed to prevent fraud

He noted that this has never been more important given the cost of living pressures consumers are currently facing and gave the example that the support offered by firms may include allowing them to act in their interest by switching products, moving to a new provider or making a complaint.

The FCA wants to see more consistent and high level consumer support offered across retail and financial services, but Cafferky noted that it recognises that firms differ in areas like size, product offering and consumer base. 

As a result of this, the FCA has included what it refers to as rules of thumb in its guidance so firms can get a sense of what the regulator is looking for in real terms.

“For example, products shouldn’t cost more than consumers expected up front. So, that means no unreasonable exit fees, charges or other costs like delays, distress or inconvenience without good reason,” Cafferky said.

“Also, after sale support should be as good as pre-sale support, so consumers shouldn’t find it as easy to switch, leave or make a change as it was to buy the products in the first place,” he added.

In terms of how a firm provides support, the FCA has not prescribed which channels of support firms must offer and does not expect that support will always be provided via each individual customer’s preferred channel.