The Financial Conduct Authority chair Ashley Alder has told MPs the “industry has come a long way in a few months” on the Consumer Duty. He made the remarks to Treasury Select Committee on Wednesday, two weeks before the new rules are due to come into force. The Consumer Duty has seen a “huge level of engagement” from the industry, with the promise behind the legislation to “make a significant difference to consumers”, Alder added.
The new rules that come with the Consumer Duty will imply a big change in reality to financial services in the UK. Despite the committee being focused on such topics as mortgages and savings, Treasury Select Committee chair and Harriett Baldwin’s first question to Alder and FCA chief executive Nikhil Rathi was about the Consumer Duty “as it will be implemented in less than two weeks”. The rules come into effect on 31 July 2023 and aim to set higher standards of consumer protection across all retail financial services. Rathi also told the committee that in time he “he hopes to see trust in financial services go up and complaints to the Financial Ombudsman Service go down” due to the Consumer Duty. Rathi added that the rules will result in firms having to “think about if they are putting consumers at the heart of the journey” and making sure value and customer service are delivered. Overall, the Consumer Duty “is a really significant piece of legislation”, said Rathi. But Rathi was concerned that certain sectors are behind in their preparation for the Consumer Duty’s implementation.
Regardless of the FCA’s high hopes the regulator has noted various issues in the run-up to the implementation of the Consumer Duty. In January the FCA warned that some firms may struggle to apply the Consumer Duty before the new rules come into force. The regulator reviewed a sample of implementation plans and found that some firms are behind in their planning. As a result, the FCA fears these firms may find it difficult to apply the Consumer Duty effectively on time for the deadline. The FCA has found that some firms needed to accelerate their work to implement the Consumer Duty to meet the deadline.