Firms must support customers through Consumer Duty amid cost crisis
The Financial Conduct Authority (FCA) has reminded firms of their clear expectations to support consumers facing increased cost of living pressures. Firms must prioritize customer needs and prevent foreseeable harm under the Consumer Duty, especially for those in vulnerable circumstances.
Adapting products and pricing for fair value
Firms must continuously assess whether their products and services meet the evolving needs and characteristics of their target market, particularly for customers in or approaching financial difficulty.
This includes ensuring product features do not cause harm and providing timely access to support, such as clear triggers for specialist referrals and temporary arrangements before arrears escalate.
Furthermore, firms are required to regularly review whether customers receive fair value as circumstances change, monitoring outcomes for higher-risk groups.
If a product or service ceases to provide fair value, appropriate action must be taken to mitigate harm, such as reducing charges, improving value, or removing the product from sale.
Flexibility is encouraged if fair charges become unaffordable, with providers considering premium reductions or waiving fees.
Clear communication and accessible support
Firms must provide customers with clearer, more timely, and prominent information to enable effective decision-making, particularly for those new to payment difficulties.
Communications, including digital platforms, should be tested to ensure understanding of key terms and available support.
Proactive outreach, such as ahead of fixed-rate mortgage expirations, is vital.
The Consumer Duty also mandates accessible and effective support, requiring minimal call waiting times and empowered staff to address vulnerability.
Firms should offer support via diverse channels, simplifying payment arrangements and signposting free debt advice, while adapting to urgent consumer needs.
Beyond mere compliance
This guidance underscores the FCA's commitment to proactive consumer protection, moving beyond mere regulatory compliance.
It signals that firms must genuinely embed the Consumer Duty principles, as the regulator will actively monitor outcomes and enforce shortcomings.
For consumers, this translates into a clearer expectation of support, particularly during periods of economic strain.
Source: Supporting customers through challenging times
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