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UK regulator 'raises the bar' on consumer protections

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The UK Financial Conduct Authority (FCA) has set more stringent consumer protection standards in areas such as communication and product suitability under rules released last week that reflect its plans to become a “more assertive” regulator.

Financial firms including insurers will have 12 months to implement the new Consumer Duty for all new and existing products and services currently on sale.

FCA Consumers and Competition Executive director Sheldon Mills says the duty will lead to a major shift in financial services and will promote competition and growth based on high standards.

“As the duty raises the bar for the firms we regulate, it will prevent some harm from happening and will make it easier for us to act quickly and assertively when we spot new problems,” he said.

The rules require firms to provide products and services that are right for their customers and to make it as easy to switch or cancel products as it was to buy them in the first place. The duty also puts a focus on the diverse needs of customers, including those in vulnerable circumstances.

Timely and clear information should be provided so people can understand products and services, rather than “burying key” details in lengthy terms and conditions that few have the time to read, the FCA says.

“The current economic climate means it’s more important than ever that consumers are able to make good financial decisions,” Mr Mills said.

“The financial services industry needs to give people the support and information they need and put their customers first.”

FCA says the duty forms part of its transformation to becoming a more assertive and data-led regulator and the rules have been finalised after engagement with “a wide range of stakeholders”.

Association of British Insurers Director General Hannah Gurga says the FCA has listened to a suggestion to extend the implementation period to allow firms to more effectively roll out the changes.

“We welcome the introduction of the Consumer Duty, which will continue to build on the work and good practice already undertaken by insurers and long-term savings providers in this highly-regulated area,” she said.

“We’ll review the policy statement in close detail and will continue to work with the FCA and our members on this important matter.”