Call of Duty: day one of the Consumer Duty

The FCA set out a plan to make sure banks are passing on interest rates. It got its shiny new toy out and said that the firms offering the lowest rates would have to justify how those rates offer fair value (a key component of Consumer Duty), and if they can't, they will face robust action.

This is interesting as Sheldon Mills, Executive Director Consumers & Competition at the FCA, gave a speech back in May stating that "[Consumer] Duty will provide us with a lens through which we can assess our rules" - it seems that intention is forefront of the FCA's mind as it deals with the disparity of speed between lending and savings interest rate changes in some parts of the market.

The FCA also put out a direct-to-consumer note, letting people know what they could expect from now on:

• Customer service should be helpful and easy to use. You should be able to easily fix any issues, change your plan, or cancel a product. It should be as straightforward as when you first signed up.
• You should get information that is clear and on time, so you can make good choices about your money. Key details should not be buried in long and complicated terms and conditions.
• Products and services should be right for your needs, not just pushed on you.
• The value should be fair. You should not get ripped off or hit with unexpected fees. While the price should be fair, it may not be the absolute best deal for you, so compare your options.

If you are in a vulnerable situation, maybe due to health or money problems, firms should take that into account when dealing with you.

A confession here: given that the target audience here is the entirety of the public, I felt that the FCA's note as written wasn't as clear as it could be, so I ran it through a generative AI bot at Flesch-Kincaid Reading Level 8 to generate the text above - see if you agree with me by checking the original text on the FCA's website. What's sauce for the goose is sauce for the gander…

There was a host of interesting stories in other sectors too, so let's do a quick Buzzfeed-style round up of the 7 best ones:

• Mortgage Strategy published an article, with the following quote: " those who are still in the process of, or are yet to start, aligning their firm to these new rules should be looking to review all elements of their business where they can ". If the FCA reads that, it knows where to go looking if some firms truly haven't even started yet.
• Specialist insurers, such as medical and income protection, seem worried about it as well, with MorganAsh MD, Andrew Gethling, quoted in this article: " without a consistent approach to identify, monitor and evidence vulnerability, it will be "impossible" for firms to ensure they are delivering good outcomes or meeting the new rules ".
• Independent Financial Advisers seem to be struggling too, with Professional Adviser website quoting that 70% of IFAs said they think the FCA has been unclear, with 66% saying they felt the FCA had been unhelpful. I'll grab my tin hat!
• Proactive Investors is more upbeat, saying that the FCA's overhaul will benefit savers and mortgage holders alike.
• Even Dentists are talking about it - with dentistry.co.uk saying: " Dental practices shouldn't have such a large cultural shift to make. The GDC already expects dental teams to put patients' interests first and practices are used to outcome-based regulation. "
• Specialist adviser-network New Leaf has signed a deal with VouchedFor to proactively seek client feedback on the specific actions it can take to improve service levels and better meet the Consumer Duty.
• Fair4All Finance was positive about the Duty, but reminded us that this applies to people who buy financial service and products, saying that it will "remain alert to the lack of access to financial products facing customers who are considered too risky or vulnerable".
• Which raises an interesting point around financial inclusion - firms will only be held accountable for the customers they say yes to, not the ones they say no to.
• Aside from the benefit to consumers - which I firmly believe will ultimately translate into a benefit for firms as well - I hope that this focus on good outcomes at every stage of the customer journey results in more investment in debt management functions within organisations.

If you want to know more about this, please feel free to get in touch.