Unveiling the Consumer Duty: Perspectives from the Regulator, Financial Services, and the Consumer

In a landmark move, the Consumer Duty made its debut on the 31st of July this year, heralding a new era in the financial services landscape. In this article, we embark on an illuminating journey through the eyes of key stakeholders: the Regulator, the Financial Services Industry, and the Consumer.

Financial Conduct Authority: A 14-Point Pledge to Empower Consumers

The Financial Conduct Authority (FCA) has wasted no time in ensuring that banks and building societies pass on interest rate rises to savers appropriately, enhance customer communication, and offer better savings rates. Although the focus is initially on savings, a glimpse into their 14-point action plan reveals their broader approach to Consumer Duty.

Here are the first three points of their action plan, signaling their commitment to the cause:

1. The FCA demands that firms offering the lowest rates provide their fair value assessments under the Consumer Duty by 31 August 2023, with robust action planned against non-compliance by the end of 2023.
2. The FCA commits to reviewing the timing of firms' savings rate changes with every base rate adjustment.
3. The FCA pledges to publish biannual analyses of firms' easy access savings rates, ranking them from best to worst—a notable shift in tactics that may redefine the industry-regulator dynamic.

Point three, in particular, shines a spotlight on their approach, as it involves publicly identifying "poorly performing" firms—a step that might not sit well with everyone. The repercussions of this move could be substantial. You can explore the full details of their strategy through the following link at FCA's website

UK Finance: Evolving Towards Excellence

Enter UK Finance, the collective voice representing over 300 firms within the banking and finance sector. They are the architects of competitiveness, the champions of customer support, and the enablers of innovation. With a mission to foster a safe, transparent, and dynamic financial industry, they are more than just advocates; they are the industry's pulse.

In their astute assessment, UK Finance sees Consumer Duty as an evolution, not a revolution. They contend that it extends the principles of Treating Customers Fairly (TCF) while reinforcing the already high industry standards. Remarkably, they predict a limited impact on consumers, asserting that the interpretation of price and value remains unchanged. Instead, they foresee a landscape marked by clearer product communication and enhanced customer support. This, they believe, will be driven by a commitment to accessibility for vulnerable customers, rather than a seismic shift in paradigms. Their insights can be explored further at UK Finance

Consumer Association (Which?): The Voice of the People

Enter Which?, the UK's unyielding consumer champion, an uncompromising force for fairness, simplicity, and safety. Their not-for-profit ethos is centered on safeguarding consumer interests and making life better for all.

Which? takes a strikingly different stance on Consumer Duty, likening it to a big bang in retail financial services—a perspective in stark contrast to UK Finance's evaluation. Their perspective anticipates immediate benefits for consumers, envisioning an end to the exploitation of customer behaviors and knowledge gaps. They underscore the expectation of improved communication, fairer pricing, and elevated customer service levels. In essence, the Consumer Association intends to wield its influence to hold the government and the FCA accountable for tangible change. Read more about their viewpoint on Which? website

In conclusion and perhaps not unsurprisingly, the Consumer Duty launch has ignited diverse perspectives from the Regulator, the Financial Services Industry, and the Consumer. As this transformational journey unfolds, it promises to shape the financial landscape in ways that none of us can predict with certainty, but it is undoubtedly a pivotal moment in the sector's evolution.

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