Price is just one element of the consumer duty, said the FCA's Sheldon Mills, pointing out that more work needs to be done by firms.
Speaking today (July 31), one year on from the implementation of consumer duty, Mills - executive director, consumers and competition at the Financial Conduct Authority - thanked firms for playing their part so far.
However, he said it was just the beginning of the journey and there were still a number of areas where firms needed to make improvements.
Mills said some in the industry are concerned the rules that protect customers are at the expense of growth, but he said the two were not mutually exclusive.
He said: “We want to see inclusive, sustainable growth, where consumers have appropriate access to products and services that meet their needs.
“In delivering that, we face many changes and challenges, and we must remain flexible and adaptive to meet them.”
Looking forward, Mills said there is space for technology and artificial intelligence to play a part in advice but this should not come at the expense of wider inclusion.
In the coming weeks, the FCA will publish its programme of consumer duty work going forward.
It will include three initiatives, prioritised by the regulator, which it said are:
- A need to act to address harm, or potential harm, to retail customers.
- Greater understanding of how firms are embedding the duty, the outcomes customers are getting, and where potential issues are emerging.
- Sharing more information on good practice and the FCA’s expectations to benefit industry and help drive better outcomes.
Price and value
He said price and value is an area firms have found challenging, so the FCA will focus on this aspect of the regulation too.
Mills said: “Our role is not to set prices. But rather to ensure that firms are robustly assessing whether they are offering fair value to their customers and ensure firms take appropriate action where their assessments indicate that their products and services may not offer fair value.
“Many of the harms of poor value are exacerbated by firms’ lack of compliance with consumer understanding or customer support requirements, for example by using complex product terms and conditions, or opaque fees.
“Ultimately, we are seeking to ensure that value overall is provided - price is one element, but service and understanding are also key components. We will be taking a holistic approach to the application of the consumer duty.”
He added the FCA would not stand in the way of well-run businesses making profit, as long as the price is reasonable compared to the benefits customers receive.
In the speech, he said positives of the rules include one large financial advice firm making significant changes to its business model to “simplify and unbundle” its charging structure resulting in greater transparency.
And he said many platform operators had changed the way they deal with interest earnt on cash balanced, after it wrote to firms with its concerns in December 2023.
Today (July 31) also marks consumer duty coming into force for closed products and services.
Mills added: “You’ve heard this from us before, but the consumer duty was never going to be a once and done act. It is an ongoing journey for improvement that we’re on together.
