Give customers a fair deal or else, finance regulator warns sector
N ew rules, taking effect in just over two months, aim to ensure that people are treated better by the companies from which they get their mortgages, current accounts, insurance and other financial products.
Banks, building societies, insurers, investment firms, and many other businesses have been warned they must be ready for one of the biggest-ever shake-ups of consumer finance in the UK.
The new regime, from the Financial Conduct Authority (FCA), will see the introduction on 31 July of the so-called “consumer duty,” which sets higher, clearer standards of protection, and explicitly requires companies to “put customers’ needs first”.
This could mean being told about better interest rates on a mortgage available to you if you are coming to the end of a fixed deal, or halting unreasonable exit fees, which stop people from leaving a financial product to go to a better one.
The drive is aimed at producing what the FCA calls “good outcomes” for consumers: reduced call-waiting times, an end to rip-off charges and fees through clearer promotions, and making it easier to cancel or switch investments.
And last week, Sheldon Mills of the FCA warned firms which ignore the new rules that they faced swift action where there was risk of harm to consumers. “In some cases firms can expect us to take robust action, such as interventions or investigations, along with possible disciplinary sanctions,” he said.
Tim Hogg, at consultants Oxera, says the new rules are among the biggest reforms of financial regulation in the last 15 years. “I hope, when it comes to buying new products, it’s less of a head-scratcher for people in terms of what is the right one for them.”
The FCA says it wants consumers’ needs to be put first and for there to be a
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