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The Financial Conduct Authority (FCA) has urged companies to ensure they are ready for the July 31 deadline for the introduction of the Consumer Duties rule.
FCA has identified four key areas for the company to focus on which include gathering evidence to demonstrate that products represent fair value and having clear controls over what action to take if products do not provide fair value.
Sheldon Mills, executive director of Consumer and Competition at FCA, warned that companies that neglect Duty or do the most harm can expect “swift action”.
Mills said: “Our monitoring and enforcement approach will be worth the harm – or risk of harm – to consumers, with a sharp focus on results.
“We will prioritize the most serious violations and act quickly and decisively if we find evidence of harm or risk of harm to consumers.
“In some cases, companies can expect us to take decisive action, such as intervention or investigation, along with possible disciplinary action.”
Mills also acknowledged the work done by financial services companies to implement the task and explained how it could increase the competitiveness of the sector, saying:
“Since we published our final regulations and guidance in July last year, the financial services industry has worked closely with us to fulfill Parliament’s wish to implement the new Consumer Duty.
“The UK’s 52 million financial services consumers depend on the sector to deliver good returns, and need to be better protected from harm, especially in these challenging economic times.
“The Duty will help the UK financial services industry remain the world’s leading advocate of financial services, as companies must think harder to innovate and compete to find better ways to serve customers.
“If properly implemented by companies, Consumer Fees will help companies retain and attract customers and will increase the competitiveness of our financial services sector.
“This duty means consumers must receive communications they can understand, products and services that meet their needs and offer reasonable value, and they get the customer support they need, when they need it.”
To further support companies, FCA is sharing findings from its review of the company’s fair value valuation framework, which highlights good practice and areas for further consideration.
The review found that the company had carefully considered FCA’s price and grade requirements, but some companies had more work to do to comply with regulations.
FCA said today’s cost-of-living pressures make it even more vital for consumers to get a fair value, and this should also benefit the industry’s competitiveness as companies seek to offer their best to compete for customers.
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