The UK Financial Conduct Authority (FCA) has warned financial firms to ensure they are ready for the start of a new Consumer Duty, which introduces more stringent protections around products and services. 
 
FCA Executive Director of Consumers and Competition Sheldon Mills says firms that ignore the duty or pose the most harm can expect swift action, with the response to be proportionate. 
 
“We will prioritise the most serious breaches and act swiftly and assertively where we find evidence of harm or risk of harm to consumers,” he said in a speech delivered last week at EY. 
 
“In some cases, firms can expect us to take robust action, such as interventions or investigations, along with possible disciplinary sanctions.” 
 
The duty comes into effect from July 31, a year after final rules and guidance were published by the regulator. 
 
“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,” Mr 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 customer support they need, when they need it.” 
 
The Consumer Duty requires firms to undertake fair value assessments to demonstrate if the price a consumer pays for a product or service is reasonable compared to the overall benefits they can expect to receive. 
 
The FCA has reviewed firms’ fair value assessment frameworks and highlighted good practices and areas for further consideration ahead of the start date, including having “clear oversight and accountability” of necessary remedial actions if required. 
 
The regulator says the current cost of living squeeze makes the new rules all the more important for consumers.