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Learn how new banking rules will affect your charity or voluntary organisation.
The Financial Conduct Authority (FCA) has introduced a new requirement called Consumer Duty.
The Duty sets higher and clearer standards of consumer protection across financial services. Banks and other financial institutions (often called ‘firms’) have been busy putting plans in place to comply with the new rules, which came into effect on 31 July.
Here’s our breakdown of what to expect.
Consumer Duty requires firms to ensure ‘good outcomes’ for all customers. They also need to provide data and evidence to show they’re achieving these good outcomes.
The FCA’s guidance (pdf, 1.1MB) is clear on what ‘good outcomes’ are. Firms should provide customers with the following.
Firms must review their existing policies, pricing, training and customer journeys. This includes web pages, call centre scripts, customer feedback and complaints processes, and more.
This has been an enormous task. One bank told us they’ve reviewed hundreds of policies and processes to make sure they’re ready for the Duty.
As well as reviewing existing products and services, firms must also now embed the Duty’s principles in their future work.
Evidence is a key part of Consumer Duty. Firms must prove they’re providing good outcomes for every single customer, no matter their individual circumstances.
For example, the FCA’s guidance says:
what [a] firm needs to do to comply with the Duty will vary depending on what customers in the relevant target market would expect
This means firms need to have a clear understanding of their customers’ expectations. They must also be able to show they’re meeting the expectations of every customer group.
The FCA’s head of competition policy, Ed Smith, explains what firms should be doing on outcomes.
This includes identifying and addressing poor outcomes, and collecting, analysing, and understanding outcomes data.
Consumer Duty applies to financial products and services for retail customers. This includes charities and voluntary organisations.
It’s important you know what to expect from financial institutions, including your bank, from 31 July. You should now get the following.
You should feel confident challenging firms if you don’t think they’ve provided you with good outcomes.
You should make sure your experience is captured in their data. You can do this by:
If you’ve tried to provide feedback to your bank but are still experiencing challenges, you might want to report your experience to the Financial Ombudsman service for small businesses.
This service can help charities with annual turnovers of less than £6.5m and trusts with a net asset value of less than £5m. You can check your eligibility for the Ombudsman service.
As well as our ongoing work with UK Finance we’re considering how we can influence banking policy and practice.
For example, we want the FCA to review outcomes for charities and community organisations as part of the Consumer Duty going forward.
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