FCA is analyzing firms’ consumer savings deals to assess their value
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The Financial Conduct Authority (FCA) started assessing the products and services of nine different UK companies. The goal is to deduce whether the firms are offering fair values and ensure consumer savings deals of top quality.
The move comes nearly two months after the country saw the introduction of The Consumer Duty — a 14-point plan to boost cash savings interest rates in the country. The plan went in full force in early August, meaning that the local companies are expected to be fully compliant with it by now.
What are the financial firms’ obligations?
The plan made it a requirement for firms to ensure their products and services retain and deliver fair value to consumers. The goal is to ensure that customers of these businesses will always have access to a competitive savings market.
The regulator noted that there has been greater availability of higher interest rates in both easy access and term-limited accounts. In other words, the plan is already showing results. Now, the FCA seeks to ensure that the companies are in full compliance and that their users are getting the best deals available.
The managing director of MorganAsh, Andrew Gething, commented on the new development. He said: “Where there may still be those questioning the new regulation, today’s action by the FCA is an important reminder to all financial services that Consumer Duty is now live and firms are bound to meet its requirements – or face investigation. As the base rate has continued to rise, the spotlight has remained on savings and the rates being offered by both banks and lenders.”
He added that one part of the overarching goal of delivering good outcomes to customers is ensuring that fair value is an important component. Gething believes that this spans much further than simply ensuring that savings deals represent fair value. Instead, companies are required to support the financial resilience of the customers. This includes informing them whenever higher rates become available. In other words, it is now the companies’ responsibility to make sure that their consumers remain in the loop.
The regulator felt forced to get involved with financial companies’ practices
The Financial Conduct Authority noted that the pace at which companies have been acting on this has been quite slow. As such, the firms have forced the regulator’s hand, essentially forcing it to get involved.
The regulator believes that communication and good data are fundamental, which is the case with all areas of Consumer Duty. With that being the case, the regulator made a promise that it would crack down on any banks that fail to meet the new requirements regarding meeting their customers’ needs during the rollout of the new program.
These companies have failed to serve consumers continuously, and because of them, over 7.4 million people became unable to reach their providers during the 12-month period prior to May 2022. This is unacceptable, and the banks have now been fully aware of their duties and responsibilities. Continuous failure to comply will likely be treated as the intentional breaking of the rules and dealt with accordingly.
