Watchdog’s new duty for banks: ensure good outcomes for customers
Good outcomes for customers – that is now the Financial Conduct Authority’s aim in regulating banks and other service providers. People should expect to be treated well.
Chloe May (pictured) and Anna Tickle are Research and Campaigns Volunteers at Citizens Advice Epsom & Ewell.
The watchdog has introduced a new Consumer Duty* covering all products and services. The duty prioritises the customer and puts a focus on the quality of services for the first time.
As well as delivering ‘consistently’ good outcomes, providers must meet customers’ varied needs and actively work to offer appropriate support.
Explaining further the FCA will demand providers:
- offer fair value
- give clear and accessible information about their products
- show customers are able to access support when needed
- provide evidence for delivery of outcomes.
In an informative blog national Citizens Advice** calls the new duty ‘a wholesale shift in the culture of financial services firms’. The charity will monitor progress in tackling the ethnicity penalty, creating better online consumer journeys, and effective communication of forbearance support.
The cost of living crisis and interest rate rises have led to an increase in mortgage payments putting further financial stress on the average British homeowner. Rents are sky-high and many people are using credit to pay for essentials.
While carefully following all 3 national issues at CAEE we will focus first on forbearance support as a vital option for homeowners and other borrowers. Here’s how homeowners could benefit.
This is when a mortgage servicer or lender allows individuals to pause or reduce mortgage payments for a limited time while they build back their finances. Lenders can offer it as an alternative to foreclosure or leaving the borrower to default.
For many, forbearance could be preferable to taking out further loans or limiting their budget for essential goods. Lenders will now have to make customers aware of the option, how to access it and if they qualify for it.
This is particularly important at the moment as the need for financial support grows. If the consumer duty informs customers of all options, they can make better decisions and achieve better outcomes. They can also remind lenders of the different behaviours the duty demands.
* The FCA’s Consumer Duty will lead to a major shift in financial services, FCA, 27/07/23
** The Consumer Duty is here, but will it work? Citizens Advice, 31/07/23
Early response of the finance industry: What is the new Consumer Duty and how does it apply to commercial finance? UK Finance, 18/04/23