- Financial Institutions to Prioritize Customer Requirements under New Regulations
- Customers to Benefit from ‘Consumer Duty’ Regulations
- Insurers Required to Demonstrate Fair Premium Calculation under New Guidelines
Tomorrow’s implementation of new regulations should compel financial institutions to improve their standards and prioritize customer requirements.
Under the Consumer Duty regulations introduced by the Financial Conduct Authority (FCA), businesses will be required to demonstrate that they are acting in the best interests of their customers by providing them with clear information, helpful customer service, and deals that offer fair value and satisfy their needs.
Uncertain is the effectiveness of the City watchdog’s standards in requiring firms to clean up their act.
The good news is that beginning tomorrow, consumers will have a new weapon to add to their arsenal when battling financial institutions over poor service or unfair pricing.
Here, we explain what the proposed changes will entail for your rights.
Companies will be required to provide customers with useful information and provide products that function as anticipated.
You should be able to switch or cancel your accounts and services just as effortlessly as you were able to purchase them.
Rocio Concha of the advocacy group Which? states, “Consumers who find a company falling short of these new standards and who wish to file a complaint should do so directly with the company.”
Companies will be held to a higher standard, so if you believe they are not abiding by the new regulations, you can cite “consumer duty” in your complaint.
Better returns should be offered to savers.
Banks on the main street are criticized for failing to pass on higher interest rates to savers. But under the new guidelines, banks are required to provide consumers with ‘fair value’ and must justify their rates – or face repercussions.
Additionally, banks must inform savers when a better interest rate is accessible. More investors will realise their funds may be in low-return accounts.
The plans also seek to facilitate account transfers by ensuring that exit fees on fixed-term savings products are “proportional and reasonable.”
A small number of banks and building societies have already made modifications to assure compliance with the new regulations.
Santander opened its online-only eSaver and eIsa accounts to phone and in-person customers this month.
Up until now, the best deals were designated for those who bank online. Other high-street banks are anticipated to follow suit and offer online-only accounts to all consumers, allowing more individuals to take advantage of the best rates.
Companies cannot impose ‘unjustified’ fees.
Companies will no longer be permitted to charge ‘unjustified’ fees that are disproportionate to returns. This means that you should not be charged excessively high fees to maintain a non-profit account.
Sheldon Mills, the FCA’s executive director of consumers and competition, thinks insurers should offer customised policies.
He recently said people should be able to invest in their futures knowing companies are offering the correct items.
Insurers must demonstrate how premiums are calculated.
The City watchdog banned the ‘loyalty penalty’ used by several large insurers a year ago. To attract new business, insurers would routinely charge existing customers more than new customers.
Insurers should illustrate their premium calculations in tomorrow’s guideline.
The proposed rates must provide ‘fair value’ and not take advantage of customers with low incomes or who are vulnerable.
Insurers must explain claim denials, giving customers more information when submitting a claim.
Nonetheless, there are concerns that insurers are falling short of these standards just days before they take effect.
According to research by Which?, more than three-quarters of auto insurance policyholders in the United Kingdom say their provider did not explain why a claim was denied, partially accepted, or disputed.
Drivers have struggled to contest or complain to the Financial Ombudsman Service due to this lack of explanation. According to Scott Dixon of The Complaints Resolver, the regulations could theoretically result in more successful auto insurance appeals.
He adds, “The consumer duty raises the bar for businesses, so consumers will have a better chance when appealing a denied claim.” If they believe they have been treated unjustly, they will still need to file strong claims and maintain their position.
