The FCA’s Consumer Duty will come into force on a phased basis, but starts rolling out on 31 July 2023.
The Financial Conduct Authority has met with the UK’s largest banks to monitor the savings markets and the decisions made in regard to the rates offered by banks, the regulator announced.
The goal was to challenge financial institutions where their decision-making has been slow, leading consumers to feel the squeeze from rising interest rates and prices. “It is more critical than ever that they are offered fair and competitive saving rates”, the FCA stated.
“Put consumer interests at their heart”
In the “constructive meeting” between the FCA and the banks, the latter recognized that they needed to do more to help their consumers access the best rates, the regulator alleged, adding that there is a need for further guidance on their part.
“Through preparation for our new Consumer Duty, which requires the firms we regulate to put consumer interests at their heart, we have started to see some positive action by banks and building societies to improve their rates, and to ensure their customers are benefiting from better value products. We now want to see that progress accelerate. We are also increasingly seeing customers switching their savings products to those with higher rates. We continue to urge savers to shop around to make sure they’re getting the best deal”.
The FCA wants a competitive market with fair-value retail banking products and with banks helping consumers to access them. The FCA’s upcoming consumer duty is expected to set a new standard for firms from the end of July, including on savings rates. Ultimately, the financial watchdog expects the savings market to support savers to benefit from higher interest rates.
UK FCA’s Consumer Duty comes into force on 31 July 2023
The FCA’s upcoming Consumer Duty introduces rules comprising:
- A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers.
- Cross-cutting rules providing greater clarity on our expectations under the new Principle and helping firms interpret the four outcomes
- Rules relating to the four outcomes we want to see under the Consumer Duty. These represent key elements of the firm-consumer relationship which are instrumental in helping to drive good outcomes for customers.
These outcomes relate to products and services, price and value, consumer understanding, and consumer support.
Firms will be required to consider the needs, characteristics, and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. Firms will need to understand and evidence whether those outcomes are being met.
The rules and guidance will come into force on a phased basis:
- for new and existing products or services that are open to sale or renewal the rules come into force on 31 July 2023
- for closed products or services, the rules come into force on 31 July 2024
