New Consumer Duty rules launched today in a bid to 'end rip-off charges and fees' – here's all you need to know

The plans for the new 'Consumer Duty' were initially put forward by the Financial Conduct Authority (FCA) in December last year. 

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

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

Under the higher standards, which have been given the go-ahead by the FCA today (Wednesday 27 July), consumers should find it as easy to switch products and cancel and complain as it was for them 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 responded to the first consultation on this in May 2021 and again in February this year. We broadly welcomed the proposals both times.

The new rules should mean all customers receive fair value and fair products – but firms have up to two years to comply

The FCA is giving firms 12 months to bring in the new rules for all new and existing products and services that are currently on sale, and a further 12 months for older products that are no longer available. This means consumers may not see the benefits of the new rules straightaway.

Under the new regulations, put together by the FCA, firms will have to:

• End rip-off charges and fees

• Make it easier to switch or cancel products

• Provide helpful and accessible customer support, not making people wait so long for an answer that they give up

• Provide timely and clear information about products and services that people can understand, so they can make good financial decisions, rather than burying key information in lengthy terms and conditions which few have the time to read

• Provide products and services that are right for their customers

The overarching principle behind these requirements is that firms must "deliver good outcomes" for customers. 

Sheldon Mills, executive director of consumers and competition at the FCA, said: "The Consumer 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."