The FCA’s Consumer Duty, in force from 31 July 2023, is a huge step forward for consumer protection in the UK. Here’s why the Financial Ombudsman Service is essential to its implementation.
The Financial Conduct Authority (FCA) has introduced a new Consumer Duty that sets a higher standard of care for companies dealing with consumers. The Consumer Duty requires companies to act in the best interests of their customers, take their individual circumstances into account, and ensure that their products and services are suitable for them.
The aim of the Consumer Duty is to promote better outcomes for consumers by encouraging companies to prioritise their customers' interests. This is particularly important in the financial services sector, where customers place a great deal of trust in the firms they deal with.
The introduction of the Consumer Duty is a significant step forward for consumer protection in the financial services sector. It puts the onus on companies to act in the best interests of their customers, rather than just complying with regulatory requirements.
What does Consumer Duty mean for the Financial Ombudsman Service?
The Financial Ombudsman Service (FOS) is responsible for resolving disputes between consumers and financial services firms, and it has been instrumental in pushing for the introduction of the Consumer Duty to better protect consumers. Under the Consumer Duty, companies are required to act in the best interests of their customers, take their individual circumstances into account, and ensure that their products and services are suitable for them.
If a consumer feels that a company has not fulfilled these obligations, they can make a complaint to the FOS, which will investigate the matter and make a determination as to whether the company has breached the Consumer Duty. The FOS has the power to award compensation to consumers where it finds that a breach has occurred.
The FOS believes that the introduction of the Consumer Duty will help to reduce the number of disputes it receives, as companies will be held accountable for providing fair and appropriate treatment to their customers.
To sum up:
The introduction of the Consumer Duty is a positive development for consumers in the financial services sector. It represents a shift towards a more consumer-centric regulatory approach and should help to ensure that companies are held accountable for providing fair and appropriate treatment to their customers.
The FOS and FCA will work together to ensure that firms comply with the new standards of care and that consumers' interests are protected.
Who to speak to at Claro Wellbeing
Galina Stavskaya CFA, leads partnerships at Claro Wellbeing and will be the best person to explore if Claro Wellbeing can help you around your specific needs.
Further recommended reading
The FCA & FOS has published several documents about the Consumer Duty, including a policy statement, consultation papers, and guidance. You can find these documents on the FCA & FOS website:
Galina Stavskaya-Barengo, CFA
