Consumer Duty is a set of outcomes supplied by the Financial Conduct Authority to ensure good customer outcomes. As a car finance broker, we adhere to these rules and regulations set by the FCA to provide higher standards of customer protection and clearer standards across all financial services. Read more to find out how it affects you and what we’re doing to help.
What Does Consumer Duty Mean?
The Consumer Duty, established by the Financial Conduct Authority (FCA), sets new standards for financial services firms in the UK. It requires firms to consider customers’ needs, deliver products and services that align with those needs, provide fair value, and support customers in achieving their financial objectives. Under these regulations, firms are expected to act in good faith, prevent foreseeable harm, and offer information that is clear, timely, and comprehensible.
What are the Consumer Duty Rules?
The Financial Conduct Authority sets Consumer Duty rules, and they require all financial firms to:
- Ensure that switching or cancelling products is as straightforward as acquiring them.
- Deliver customer support that is both accessible and informative.
- Communicate product and service details promptly, clearly, and comprehensibly to facilitate well-informed financial decisions.
- Offer products and services that appropriately suit the needs of customers.
- Prioritise the authentic and varied requirements of all customers, including those in vulnerable situations.
How Does Consumer Duty Affect Customers?
The Consumer Duty regulations are all about protecting customers and aim to create an environment which is customer-centric and out their needs first. These Consumer Duty regulations can help to provide customers with:
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Enhanced Products and Services:
Organisations are expected to design products and services that effectively address customer requirements while delivering fair value.
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Clear Communication:
Customers should receive information that is straightforward and free from unnecessary technical language.
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Prevention of Customer Harm:
Firms are responsible for proactively identifying and mitigating potential risks to customers
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Support Towards Financial Objectives:
Organisations should assist customers in achieving their financial goals by providing suitable support and guidance.
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Focus on Vulnerable Customers:
The Duty explicitly recognises the particular needs of vulnerable customers, ensuring they receive appropriate care and attention.
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Increased Transparency:
Firms are required to conduct business with greater openness and honesty toward customers.
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Strengthened Customer Support:
Customers must have access to adequate support for products and services as needed.
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Assurance of Fair Value:
The Consumer Duty stipulates that both current and legacy products must deliver fair value to all customers.
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Minimised Exploitation Risks:
The Duty seeks to prevent organisations from taking advantage of customers’ behavioural tendencies or knowledge gaps.
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Promotion of Trust:
By elevating standards of customer care, the Duty aims to enhance trust within the financial services sector.
What are Refused Car Finance Doing to Comply?
There are four key elements which the FCA have outlined as their Consumer Duty outcomes. As a regulated and authorised broker, we ensure we’re adhering to these guidelines.
The four outcomes describe principal aspects of the firm-customer relationship. The conduct of firms concerning each outcome is important in enabling consumers to address their financial needs and support their financial wellbeing.
- Products and services.
- Price and value.
- Consumer understanding.
- Consumer support.
These outcomes form the basis for the rules and guidance reflecting the FCA’s expectations of firms under the Consumer Duty. The outcomes are distinct but interconnected; for instance, deficiencies in product design or governance may influence value assessments. For all outcomes, the following is expected:
- Firms review current practices to align with Consumer Duty requirements.
- Firms are able to provide evidence of outcomes.
- Outcomes are reviewed and monitored continuously.
- Any identified issues are addressed or mitigated.
How Do I Find Out More?
- If you need more information about Consumer Duty or to keep up to date with the latest developments, you can visit the Financial Conduct Authority website.