Financial industry faces major regulatory overhaul as Consumer Duty comes into effect
Today marks the implementation of the most substantial regulatory overhaul of retail financial services in two decades. The Financial Conduct Authority’s (FCA) new Consumer Duty regime will set higher and more precise standards of consumer protection across the financial sector.
The new rules demand that financial companies, including banks, building societies, insurers, and intermediaries, prioritise “good outcomes” for their customers and actively prevent “foreseeable harm.” The shift towards more robust consumer protection has led to various responses from industry leaders.
Natalie McNamara, national sales manager at finova Payment and Mortgage Services, emphasised the importance of compliance with the new Consumer Duty rules. She said: “Today marks the deadline for firms to comply with the new Consumer Duty rules, with many intermediaries having already implemented a clear plan of action in advance, in order to meet the FCA’s new expectations.”
For those still adapting to the changes, McNamara urged firms to review all elements of their business and continue to embed the new practices to facilitate better customer outcomes. She also highlighted the role of technology in ensuring follow-through, such as automating emails to stay in touch with customers throughout the entire mortgage process and utilising sourcing tools to help clients access suitable products without extra time and effort.
Socrates Mhlanga, chief risk officer at The Exeter, provided insights from the protection sector, expressing confidence in the industry’s readiness to meet the new standards. He said: “In recent years, protection and health insurers have made significant progress in expanding their products and services to meet a wider range of needs. These positive steps provide us with a solid foundation to build upon.”
Mhlanga also acknowledged the opportunity the Consumer Duty legislation offers for the industry to surpass expectations and establish new standards in customer service and product development. However, he stressed that “meeting regulatory requirements is not a one-time event,” and the industry must be prepared to continually review customer outcomes.
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