FCA launches new Consumer Duty – meaning financial firms can't leave existing customers stuck on poor mortgage, savings and debt rates

The proposed overhaul, which is being heralded as one of the biggest advancements for consumers in more than 20 years, will see financial firms having to provide customers with information they can understand and offer products and services that are fit for purpose.

Under the higher standards, which were put out for consultation by the regulator today (7 December), consumers should find it as easy to switch products and cancel and complain as it was to buy the product or service in the first place. 

Current practices mean firms are not required to offer new customers the best product or service, or let them know if they could get a better deal than their current one.

MoneySavingExpert.com founder, Martin Lewis, said the financial services industry will "fight tooth and nail" to try and soften the proposals. He said: "The way banks operate will change, the way products are designed will change... This is big news."

The Financial Conduct Authority (FCA) is consulting on the plans until February 15 2022 and expects to confirm any final rules by the end of July 2022. MoneySavingExpert.com (MSE) responded to the first consultation in May 2021, broadly welcoming the proposals.

Martin Lewis: 'This is the biggest change in financial services since 2,000'

Martin discussed the plans to better protect consumers on ITV's Good Morning Britain today: 

The new rules mean consumers will be empowered to make good financial decisions

Under the new rules, should they come in, firms will have a duty to make sure their customers are receiving fair value and fair products. The proposals will mean firms must:

• Put better emphasis on getting products and services suggested to customers right in the first place. 

• Focus on supporting and empowering their customers to make good financial decisions while avoiding harm.

• Provide customers with information they can understand, offer products and services that are fit for purpose and provide better customer service.

To ensure that customers are protected, the FCA says it will use "assertive supervision" and a new data led approach that will help it to intervene quickly when it identifies practices that do not deliver for customers. 

Sheldon Mills, executive director of consumers and competition at the FCA, said: “The new duty will drive a change in culture at firms. We expect firms to step up and put consumers at the heart of what they do and we’ll be holding senior managers accountable if they do not.

“The duty will also help create an environment for healthy competition between firms, encouraging them to be innovative in developing products and services that meet consumers' needs.”