Companies regulated by the Financial Conduct Authority (FCA) have until July 2023 to join the first set of rules under the Consumer Obligations Regulations.
But research by Moneyhub found that 10% of decision makers at consulting firms – which include chief executives, presidents and directors – don’t think their companies understand the law well.
Of the 150 senior members surveyed, 61% said they knew a lot about the impending rules, 31% knew a little and 7% knew nothing at all.
Moneyhub has raised concerns that this “knowledge gap” has contributed to inaction across the industry, as a third of decision makers believe their company is unable to comply with As of the original April 2023 deadline, 19% said it was difficult for their business, while 14% said compliance was not at all possible for them.
The FCA has since moved the deadline to July 2023, but there are still fears that many companies will struggle to be ready in time.
According to the research, more than half (56%) of decision makers said their company was still not compliant and had no plans in place to become compliant, although the FCA expects guidance to administration have plans ready by October 2022.
Samantha Seaton, Managing Director of Moneyhub, said: “There is a clear lack of knowledge within businesses about the new consumer duty rules, but ignorance is no excuse for non-compliance. It is essential that there is more awareness not only of what the new regulations will mean for businesses, but also of how to comply in a way that benefits the business.
“Too often we can view regulation as a box-picking exercise, but that means we could be missing out on important business opportunities. Data, and in particular the contextual information available from open banking and financial transaction data, can provide businesses with the tools to design more targeted products, services, and customer journeys that lead to stronger and better relationships. profitable with customers, in addition to being Compliant with consumer obligations. »
Given the results of Moneyhub’s research, what does the FCA really expect from companies in terms of compliance with the consumer obligation?
Sheldon Mills, executive director of consumer and competition at the regulator, explained what the next set of rules means for businesses.
In his speech at the Consumer Protection in Financial Services Summit, he said, “To remind you of what we expect from industry efforts:
- Consumer understanding – “We would expect products to come with timely and clear information that customers can understand so they can make informed financial decisions. Customers make complex choices about debt, mortgages, pensions, investments and other products, often on a smartphone. It’s more important than ever to make sure they have key product information, such as features and fees, easily accessible and understandable. These are the consumer journey, the digital user experience as well as the disclosure of contractual terms.
- Products and services – “Companies should offer customers products that meet their needs, rather than pushing products that are not suitable or necessary. We all think of payment protection insurance as a historical example of this. But this is not a historical problem. We see consumers being pushed into high-risk investments, unaffordable high-cost credit, and unsuitable debt products that don’t meet their needs.
- Consumer Support – “When it comes to customer services, many of us have experienced long wait times and reduced access to in-person services such as bank branches. I’ve certainly raged against a chatbot before, but I’ve also had experiences where it’s been very helpful in resolving issues quickly. Ultimately, your customers want their issues resolved quickly and efficiently. They want to receive support that meets their various needs. We expect businesses to ensure customers are supported throughout their relationship with them and consider the best ways to engage, including digital or non-digital We understand that businesses don’t like to lose customers. But we want to see competitive markets, where it’s as easy to change, cancel or complain about a product as it is to buy it in the first place. This is especially important now. t, while every penny counts for many people. Therefore, we expect companies to ensure exit fees are reasonable.
- Price and value – “We expect consumers to receive fair value. Our intention is not to fix prices and our rules do not have that effect. But we expect companies to make sure the prices they charge are reasonable for the benefits. For example, a business lending to customers with high credit risks should ensure that high fees have a reasonable relationship to customer benefits.