New Consumer Protection Laws Overview:
- Who: Britain’s financial watchdog group has proposed new consumer protection laws.
- Why: The new ‘consumer duty principles’ put the onus on financial firms to take care of consumers and provide proof of positive outcomes.
- Where: The consumer protection laws would go in affect across the UK
Britain’s financial watchdog group is looking to revamp consumer protection laws — putting the onus on firms to take care of their customers.
The proposed changes come amidst a series of mis-selling scandals and online scams that have affected consumers across the UK, Reuters reported.
The Financial Conduct Authority, which faced scrutiny over its handling of investment fund London Capital & Finance — which collapsed in 2019 — is also looking to step up in preventing acts of consumer fraud.
The watchdog group is calling the new laws ‘consumer duty principles,’ which firms must comply with starting in April 2023.
The new principles are being put in place to ensure firms work to achieve positive outcomes and provide value for retail customers, Reuters reported.
“We expect firms to step up and put consumers at the heart of what they do, and we’ll be holding senior managers accountable if they do not,” Sheldon Mills, the FCA’s executive director for consumers and competition, told Reuters.
As it stands, firms are required to act in good faith with consumers and treat them fairly, however, the new proposal will require them to provide evidence they are achieving positive outcomes, rather than simply following product governance regulations, according to Reuters.
“This is set to change the face of the consumer financial services market,” Heather Alleyne, a financial services regulation partner at consultants EY, told Reuters.
The FCA has provided an incentive for financial firms in the new consumer duty ordinances as well, making it so that consumers can not make claims in court over any breaches of it, Reuters reported.
Consumers will still be able to make claims through the free Financial Ombudsman Service, which the FCA said it believes is a superior and more cost-efficient alternative.
The watchdog group has acknowledged the new consumer duty ordinances will only work if properly enforced, and has announced it has revamped its inner workings to allow itself to intervene quicker and in a more informed manner when needed, Reuters reported.
The FCA announced earlier this month that it is changing its processes in order to respond faster to reports of consumers in harm.
Do you believe new consumer duty ordinances will help protect consumers? Let us know in the comments!
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