The financial regulator says an overhaul of its rules will eliminate some of consumers’ biggest frustrations.
Under the new Consumer Duty, it shouldn’t take any longer for customers to file a complaint than to be sold a product.
The Financial Conduct Authority (FCA) is updating its rules on how to treat customers to focus on clarity and value.
It said this should include the end of long phone waits or rip-off fees.
Sheldon Mills, Executive Director for Consumers and Competition at the FCA, said: “The current economic climate means it is 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.”
- Call for swift action in financial disputes
The changes are a complex rewrite of some of the FCA’s rules for the 60,000 financial firms it regulates. These cover a range of sectors from banking to insurance, but have yet to include buy-and-pay services and cryptocurrency transactions.
At its heart, however, is the requirement that companies offer products that meet the needs of their customers and ensure that appropriate support is provided when people need it.
The regulator said financial firms need to collect data and be judged on it, including:
- This makes it as easy to switch or cancel products as it is to buy them in the first place, without “hiding behind chatbots”.
- Customers don’t wait so long on the phone for customer service that they give up
- ensure important information is not buried in lengthy terms and conditions
- Focusing on the different needs of customers, especially the vulnerable ones
Companies must comply with the rules for new and existing products by the end of July next year, but for older – often more complex – products that are no longer for sale, the rules will not be fully implemented until the end of July 2024.
“The FCA is likely to take criticism for this decision, especially given that many of the worst downsides in terms of things like high fees and poor service often coincide directly with companies that are no longer actively trying to attract new business,” he said Tom Selby from investment platform AJ Bell.
The FCA pointed out that only 30% of respondents felt that financial firms were honest and transparent in their dealings with their customers.
Mr Mills denied that the new rules were an admission that current regulation could not keep up with new developments.
He said the impact of the new excise tax should be felt by consumers with greater confidence that they will be treated fairly.
Matthew Upton, Director of Policy at Citizens Advice said: “Customers should get good service at a fair price. Yet we continue to see companies overcharging loyal customers, selling poor products, and making it difficult for buyers to make careful, informed decisions. In a rapidly changing world, it’s harder than ever for regulators to adapt and protect consumers.
“We support the FCA’s consumer duty, but waiting for it should not be seen as a green light for businesses to play fast and loose with customers while they can.”
Last month, Nausicaa Delfas, the interim chief finance ombudsman, said problems faced by victims of poor service from financial firms should be resolved quickly, especially in uncertain economic times.
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