Firms must act now to prepare for a new consumer duty, a boss at the City regulator has said.
Sheldon Mills, executive director of competition and consumers at the Financial Conduct Authority (FCA), told firms: “You still have time to deliver. But you must act now.”
Speaking at an online event hosted by Deloitte marking the countdown to implementation of the consumer duty, he said: “A small number of firms may have seen the task as too big and adopted an avoidance tactic in the hope that it will all go away.
“On behalf of your industry peers who have made the effort, we can confirm that the consumer duty will not go away. Their hard work has not been wasted.”
The consumer duty will set clearer and higher standards of consumer protection across financial services, requiring firms to put customers at the heart of what they do.
The rules come into force on July 31 for new and existing products or services that are open to sale or renewal, and July 31 next year for closed products or services.
Mr Mills said: “Our work on the consumer duty predates the cost-of-living squeeze but the current economic climate highlights the need for those high standards and protections.
“For what this looks like in practice, we can look at the plight of homeowners who are struggling with rising mortgage costs.
“Or to savers who often wait longer for the corresponding rise in their interest rates. We would remind firms that the duty needs to deliver good outcomes for customers in financial difficulty and that retail customers need to be offered fair value.
“And of course, hard economic times hit those at the bottom of the financial ladder the hardest, so the duty does carry responsibility to look out for customers with vulnerabilities.”
The duty is not retrospective, so it will not mean organisations will be taken to the Financial Ombudsman Service for past actions or omissions, so long as they are put right by July for products or services that are still on offer, Mr Mills said.
He added: “For products and services that have been withdrawn to new customers, you have until July 2024.
“At every stage of the regulatory life cycle, we will ask you to demonstrate your business models, actions you have taken and how your culture is refocusing on good customer outcomes.”