Tougher rules to protect consumers to start July 2023, says UK financial watchdog

By Huw Jones

LONDON (Reuters) – Britain’s financial watchdog said on Wednesday it would press ahead with tougher protections for retail customers that put senior officials at banks and insurers personally on the hook if they peddle rip-off products.

The Financial Conduct Authority (FCA) said the rules would apply to new and existing products from July 31, 2023, and to products that are live but no longer sold, from July 31, 2024, later than originally proposed after industry concerns.

The new protections, or “consumer duty”, will lead to a major shift in financial services and are central to the watchdog becoming faster and more aggressive in tackling poor practices, said Sheldon Mills, the FCA’s executive director of consumers and competition.

“Selling suitable products at a fair price, providing good standards of customer services and communications that people can understand shouldn’t really be a controversial thing,” Mills told reporters.

“Too many firms are still not delivering this as they should.”

The protections, put out to public consultation last December, require firms to deliver “good outcomes” and be able to demonstrate this in a product’s design, price and value, and consumer understanding and support, such as how long it takes to answer a customer call, or exit from a product.

This will increase trust and confidence in financial services, Mills said, adding cryptoasset and buy-now-pay-later products were excluded given they are not regulated by the FCA.

The 60,000 firms the FCA regulates are currently required to treat their customers fairly, a broader demand, but the watchdog wants to change culture after mis-selling scandals such as payment protection insurance, pensions and endowment mortgages going back decades, and a shift to selling to online.

The financial industry should apply the rules as soon as possible and not wait until next July, said Rocio Concha, director of policy at consumer group Which?

“Where businesses fail to meet the new rules, the FCA must stand ready to impose tough penalties,” Concha said.

Senior officials at firms are already personally accountable for their business, which now includes compliance with the protections, meaning individuals as well as firms can be fined or banned for breaches.

“We will also consider evidence of individuals’ understanding of and actions taken to comply with the duty, when considering individuals for approval,” the FCA said.

(Reporting by Huw Jones; Editing by Mark Potter)