Mills later set out that the FCA will take action “swiftly and assertively where we find evidence of harm or risk of harm to consumers”. Given the amount of guidance issued by the regulator and the proactive obligations within the duty for companies to monitor and take action where they identify improvements can be made, we expect to see increased action by the FCA following implementation.
Under the duty, companies must monitor their own compliance and act if breaches are identified and this could include providing proactive redress, not only to an individual consumer, but across all consumers that have been impacted, whether or not the consumers have complained that they suffered harm.
As with any change, there will inevitably be areas that require further clarification or interpretation, and the outcomes-focused nature of the duty will make it more open to interpretation challenges, particularly in the second half of 2023.
In the months following implementation, we anticipate an increase in complaints to the Financial Ombudsman Service. The FOS has a broad discretion to determine complaints based on what it considers to be fair and reasonable based on all the circumstances that could result in inconsistency between decisions.
However, the FCA has stated that it will work with the FOS to ensure that its interpretation of the principles of the duty is consistent within its decisions.
More customer complaints
Given the wording of the consumer principle, consumer confidence to complain about regulated products and services could increase. So, companies should expect to see more complaints from customers once the duty is implemented, particularly while its principles and interpretation are established and embedded within the industry.
In a litigation context, there may be consumer confusion about what a “good outcome” for them means, particularly in relation to debt recovery matters where a customer has no way of repaying the arrears and may receive an adverse judgment.
Companies may need to deliver difficult messages to consumers during the life of a product or service and, while this may not be good news for a customer, it may still be a good outcome if the message is delivered in a way that supports the customer support and customer outcomes of the duty.
The lack of a private right of action for breach of the duty does not mean that companies will not see allegations of breach raised in civil litigation. Customers may raise it alongside other allegations or in support of other arguments.
