The Financial Conduct Authority is giving firms an additional three months to implement the new consumer duty rules.
In a policy statement published today (July 27), the FCA announced that companies will have until July 31, 2023 to implement the consumer duty rules for all new and existing products and services that are currently on sale.
The implementation deadline will be extended for a further 12 months (until July 31, 2024) for closed book products to give firms more time to bring these older products, that are no longer on sale, up to the new standards.
The FCA previously said there would be an implementation date of April 30, 2023 but many firms complained this would not be enough time.
Speaking at a press briefing yesterday (July 26), FCA executive director of consumers and competition Sheldon Mills, said: “Firms do need time in order to implement this but consumers also need to be supported in terms of getting good outcomes, so you're always balancing the needs of implementation and operational effectiveness.
“Our judgement is that giving an additional three months is sensible, we've listened to the industry, we've also listened to consumer groups, and that's where we've ended up. Closed book products, there's more complexity there so we think that 24 months is needed.”
Mills said it will still be challenging for the industry, and the regulator recognises that, so it will “do its best” to support firms.
The regulator said its new consumer duty will “fundamentally improve how firms serve consumers” and set higher and clearer standards of consumer protection across financial services.
“It will require all firms, for those designing products through to those selling or advising products and services, to put their consumers' needs first,” Mills said.
The duty is made up of an overarching principle and new rules that firms will have to follow.
It 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.
“In turn this will make consumers better able to make good financial decisions,” Mills added. “For us at the FCA, this duty is at the heart of our new three year strategy to improve outcomes for consumers and in markets throughout the UK and it's a key element of our work to set and test high standards.”
The City watchdog said clarity on its expectations, alongside firms focusing on what their customers need, should lead to more flexibility for firms to compete and innovate in the interests of consumers.
The duty will include requirements for firms to:
- end rip-off charges and fees;
- make it as easy to switch or cancel products as it was to take them out in the first place;
- provide helpful and accessible customer support, not making people wait so long for an answer that they give up;
- provide timely and clear information that people can understand about products and services so consumers can make good financial decisions, rather than burying key information in lengthy terms and conditions that few have the time to read;
- provide products and services that are right for their customers; and
- focus on the real and diverse needs of their customers, including those in vulnerable circumstances, at every stage and in each interaction.
Mills added: “The current economic climate means it’s more important than ever that consumers are able to make good financial decisions. The financial services industry needs to give people the support and information they need and put their customers first.