Banking industry body UK Finance has raised serious misgivings about the FCA's plans to impose a new 'Customer Duty' on financial firms with the intention of ensuring a more consistent standard of consumer protection for users of financial services.
UK Finance describes the proposals as the most important regulatory intervention in a decade, marking a fundamental shift in the watchdog's approach to regulation.
Under the rules, firms will have to provide consumers with information they can understand, offer products and service that are fit for purpose and provide helpful customer service.
In its response to the consultation, UK Finance has expressed reservations about the Duty’s proposed application to firms’ back books, the role of the Financial Ombudsman Service (FOS) and a lack of proportionality in how firms will be able to demonstrate their compliance with the desired outcomes.
"The FCA currently proposes to give firms just nine months to interpret its finalised requirements, assess their full suite of products and services against them and undertake change programmes, alongside changes to governance processes and IT systems that underpin them," says Daniel Wraith, UK Finance strategic policy manager. "This would be a tall order at the best of times, but especially so while firms continue to devote significant resources to supporting their customers through the financial impact of the pandemic. For lack of time to seek, firms might understandably opt for the lower-risk option of restricting access to some products and services — or even withdrawing them entirely — particularly where the requirements of the Duty are unclear."
In its submission to the regulator, UK Finance argues that the industry needs at least two years to prepare for the changes.