The 14-point action plan was released by the regulator on the same day as a press release aimed at educating consumers on the tangible benefits that they can now expect under Consumer Duty, with the FCA reiterating that the rules are now in force and that consumers should expect:
- Helpful and accessible customer support, so it’s as easy to sort out a problem, switch or cancel a product, as it was to buy it in the first place.
- Timely and clear information they can understand, so they can make good financial decisions. This means important information shouldn’t be buried in lengthy terms and conditions.
- Providers to offer products and services that are right for them, rather than pushing products and services they don’t need.
- Products and services to provide fair value. This should mean they won’t be ripped off or have to pay costs they didn’t expect.
- Firms to consider if consumers are in a vulnerable situation when dealing with them. This could be due to poor health or financial troubles, for instance.
The FCA also outlined what consumers should do if they have a problem with their provider, or if they don’t feel that their provider is meeting Consumer Duty standards, stating they should complain to them and – if they are unhappy with the response from their provider – they should contact the Financial Ombudsman Service.
Commenting on the release of the 14-point plan, Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said:
“We want a competitive cash savings market that delivers better deals for savers, where interest rates are reviewed quickly following base rate changes and firms prompt savers to switch to accounts paying higher rates.
We welcome the progress that has been made so far but this needs to speed up. We will be using the Consumer Duty to ensure this is the case – with firms required to prove to us that they are offering their customers fair value.
We continue to urge savers to shop around to take advantage of the increasing number of better saving deals available.”
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As part of its action plan, the FCA will:
1. Require firms offering the lowest rates to provide their fair value assessments under the Consumer Duty by 31 August 2023 and take robust action by the end of 2023 against those who cannot demonstrate fair value.
2. Review the timing of firms’ savings rate changes each time there is a base rate change.
3. Publish an analysis every 6 months of firms’ easy access savings rates, listing distribution from best to worst.
4. Analyse the difference between on-sale and off-sale products, challenging firms to explain how large differences offer fair value and considering further action if this gap does not continue to close.
5. Review firms’ performance on cash ISA to cash ISA switching.
6. Conduct further analysis into the contribution of cash savings to firms’ profitability.
7. Review the effectiveness of firms’ engagement with customers by the end of March 2024 and take action if firms have not effectively delivered the outcomes the FCA has set out.
8. Work with others, including the Money and Pensions Service, to identify what more can be done to support consumers to save regularly, strengthening their financial resilience.
The FCA expects firms to:
9. From today (31.07.2023), use their fair value assessments of on-sale savings products to assure themselves and the FCA, where needed, that these represent fair value for customers.
10. Accelerate their fair value assessments for off-sale accounts ahead of the July 2024 Consumer Duty deadline for off-sale accounts.
11. Take action to prompt their customers in lower paying savings accounts or non-interest bearing accounts to consider alternatives.
12. Closely monitor the effectiveness of customer communications, with larger firms providing the FCA with an evaluation by end 2023 and any follow up action they are taking.
13. Support consumer financial resilience by encouraging customers to start saving and/or search for higher rates, with the largest firms committing to support a targeted firm-by-firm communications campaign.
14. Consider how they can support their customers to access the free advice available from MoneyHelper.