The regulator has seen positive changes since the introduction of Consumer Duty but there is still work to be done.
Delivering a speech at the Financial Conduct Authority’s (FCA’s) ‘Consumer Duty: One year on’ event, Sheldon Mills, executive director of consumers and competition, said today marked “something of a new start”.
Consumer Duty rules came into force on 31 July 2023 and today is the deadline for closed products and services.
Mills said UK financial services was “not in need of a resurrection” but said the duty was “an ongoing journey”.
“We’re committed to ensuring the benefits of the duty are realised for consumers, firms, and the whole economy.
“It is about reputation, it is about trust and it is about delivering value and growth,” he added.
Mills said: “We know we have more to do. This is not the beginning of the end for all of our efforts to implement the Consumer Duty, but the end of the beginning.”
Consumer Duty creating good change
Mills thanked firms for the steps taken to implement the duty, saying many “used it as a driver to shift your culture and improve outcomes”.
He gave the example of a “large financial advice firm” which had changed its business model to “simplify and unbundle its charging structure”, resulting in improved outcomes and better transparency.
“The duty is already having a tangible impact on consumer outcomes. And it has been driving improvements in firm culture, conduct and governance, too, which over time will drive better outcomes still,” Mills added.
Some firms have developed data and metrics to understand customers, while others have improved the way they record and capture information on vulnerabilities, he said.
Enabling growth in financial services
Mills said there were questions about whether Consumer Duty and the protection of customers was at the expense of “growth, innovation, investor appetite in the UK economy”.
He said consumer protection and growth were not mutually exclusive and should be mutually inclusive.
Mills said Consumer Duty was “deliberately flexible” to adapt to changes, which would give firms space to “innovate and find new ways of serving their customers” while being clear on expectations.
He noted that firms had found the price and value aspect of Consumer Duty “challenging”, but said it was not the regulator’s place to set prices.
Instead, it wants to “ensure that firms are robustly assessing whether they are offering fair value to their customers and ensure firms take appropriate action where their assessments indicate that their products and services may not offer fair value”, Mills added.
He continued: “Ultimately, we are seeking to ensure that value overall is provided – price is one element, but service and understanding are also key components. We will be taking a holistic approach to the application of the Consumer Duty.
“We will not stand in the way of a well-run business making profit in a well-functioning market, where there is effective competition that is in the interests of consumers.”
This week, the regulator said it would review its rules to remove any that were duplicated in Consumer Duty or unnecessarily complex.
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
