In a speech given today (May 10) at an EY conference, Sheldon Mills, executive director of consumers and competition at the FCA, warned that firms who ignore the duty or who pose the most harm can expect swift action.
Mills said: “Our supervisory and enforcement approach will be proportionate to the harm – or risk of harm - to consumers, with a sharp focus on outcomes.
“We will prioritise the most serious breaches and act swiftly and assertively where we find evidence of harm or risk of harm to consumers.
“In some cases, firms can expect us to take robust action, such as interventions or investigations, along with possible disciplinary sanctions.”
The City watchdog said firms should use the time remaining in the run-up to July 31 to ensure that their fees are fair and transparent, and that particular groups of consumers are not disproportionately disadvantaged.
Mills also acknowledged the work undertaken by financial services firms to implement the duty and set out how it could boost the competitiveness of the sector.
He explained that since the FCA published its final rules and guidance last year, the financial services industry has worked with the regulator to meet Parliament’s will to implement the new consumer duty.
“The 52mn financial services consumers in the UK rely on the sector to deliver good outcomes, and should be even better protected from harm, particularly in these challenging economic times,” he said.
“The duty will help the UK financial services industry remain world-leading proponents of financial services, as firms have to think harder about innovating and competing to find better ways to serve customers.”
If applied correctly by firms, the consumer duty should help firms retain and attract customers and will enhance the competitiveness of our financial services sector,” he explained.
Mills said the duty will mean that consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the support they need.
Review of fair value frameworks
To further support firms, the FCA is sharing findings from its review of firms’ fair value assessment frameworks, which highlights good practice and areas for further consideration.
The review found that firms had carefully considered the FCA’s price and value requirements, but that some firms have more work to do to meet the rules.
It found that some firms did not seem to be properly considering outcomes for different groups of their consumers, relying instead on broad averages.
