New Consumer Duty rules officially came into force today (31 July), as part of the Financial Conduct Authority's (FCA) efforts to set a higher standard of consumer protection in financial services.

The FCA finalised the rules and guidance for the Consumer Duty last year, as part of its broader transformation to become a “more assertive and data-led” regulator.

It has since said that it is “closely monitoring” how firms are putting the new rules in place, confirming that it will take action against those that aren’t following them.

Under the Consumer Duty, firms will be required to act to deliver good outcomes for retail customers, with firms expected to be open and honest, avoid harm, and support savers in pursuing their financial goals.

As part of this, savers have been told to expect helpful and accessible customer support, timely and clear information they can understand, and for providers to offer products and services that are right for them, rather than pushing products and services they don’t need.

The rules apply to all new and existing products and services that are currently on sale, although older products that are no longer on sale have been given until 31 July 2024 to meet the rules.

Industry experts have welcomed the launch, with Standard Life CEO, Andy Curran, describing the advent of Consumer Duty as a “true step change”, arguing that of all the financial regulations that have come into force over the years, few have had the same potential to transform how the industry engages with customers.

“It’s an opportunity for us to up our game and we’ve worked hard to do so from the hundreds of people that have ensured that our current suite of products are compliant with achieving good customer outcomes to thorough assessments to help us understand how we can raise the bar further to improve our service,” he continued.

However, The Investing and Saving Alliance director of technical policy and risk, Lisa Laybourn, emphasised that today’s deadline for Consumer Duty is “not the end of the journey”.

She stated: “We have now passed the FCA set deadline for the implementation of Consumer Duty across all new and existing products that are open to sale or renewal within the market.

"It has undoubtedly been a challenge for much of the industry to review their entire offering within the implementation timeline, but the benefit to the consumer which this refocusing will bring about is vital and worth the effort.

“However, even now the deadline for implementation has passed, we as an industry cannot sit back and think the work is done. Culture is key, and there will be many firms that will have found themselves in a good place, having already put the customer at the heart of their business, and for some there may still be further changes required.

"For all firms, realising the full benefits of Consumer Duty is a journey, and improvement can and should continue to be made beyond the implementation date.

“For example, we should continue to refine products to deliver better value. Crucially, we must also make sure our communication with consumers is more effective at increasing engagement by delivering it through means and language which can be understood and tailored to different audiences."

This was echoed by Aegon pensions director, Steven Cameron, who argued that while the thousands of individuals and firms involved in reaching this ‘brave new world’ should pause to reflect on the fruits of this collective effort, any pause for reflection needs to be brief.

“The 31 July milestone is the beginning, not the end,” he continued. “We can all expect continued scrutiny from the FCA which will be collecting data to review firms’ delivery.

"Adviser firms can expect an ongoing focus in areas such as the value of advisory services, the identification of target markets, clarity of communication and tailored support for customers with characteristics of vulnerability.

“I also see the Consumer Duty continuing to evolve over time. The external environment will generate newly foreseeable harms for us to protect our customers from. And I’ve no doubt that FCA expectations will also develop, with the duty sure to be referenced in every future policy paper, review and consultation from the FCA.

“Preparing for the Consumer Duty has led to great collaboration between advisers and providers and we must all make sure that continues. Despite some early industry cynicism, I do believe we’re seeing something good come out of the duty.

"Over time, this can only help improve the trust consumers have in the value our industry provides.”

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