Regulatory measure that should finally put the consumer first - Rocio Concha of Which?

The examples are numerous - and are issues that many of us can relate to. How many of us have suffered from poor customer service when a financial product, such as home insurance, we’ve bought has turned out to be a dud? Or been hit by unexpected extra costs? Or found it hard to make an informed decision because the information is opaque to the point of being cryptic, laced with jargon instead of easy to understand explanations?

In practical terms, the Duty will require retail financial service firms, which typically sell products like mortgages and credit cards, to deliver good outcomes for customers by meeting higher standards across a number of areas. For example, when it comes to customer service, support should be responsive and accessible rather than being difficult to reach (despite the alleged ‘importance’ of our call).

Financial products and services should be as easy to cancel, switch or complain about as they are to purchase and consumers should be provided with the right information so they can make effective choices. More will be done to stamp out unexpectedly high fees or charges and to ensure fair prices. The onus will be on firms to both define and monitor good outcomes they want to achieve, while the FCA plans to supplement this by scrutinising customer surveys, complaints data and the number of ombudsman decisions on complaints.

As the country’s consumer champion, Which? supports the aims of the new Duty, which will come into effect from July this year. Our helplines and inboxes are awash daily with complaints about firms who have either broken or teetered along the tightrope of consumer law. But new rules alone won’t be enough. To create the desired change in firms’ behaviour, the implementation of these new rules must be supervised robustly, with tough enforcement where necessary.

We aren’t the only ones to recognise the Duty’s significance in putting consumers’ needs first. Richard Wilson, the chief executive of the financial company Interactive Investor, has said the Duty has the potential to create a “Magna Carta for consumer rights”.

But the enthusiasm isn’t shared by everyone. Back in February, the City of London Minister, Andrew Griffith, reportedly took aim at the Duty, questioning how increased regulation squared with the FCA’s secondary objective of boosting economic growth and competition.

Such attacks are misguided, because improved consumer rights and better economic performance aren’t mutually exclusive. Indeed, they are complementary. Consumers who feel emboldened to try new products and services, without fear that they might be ripped off or become embroiled in protracted disputes just to get their money back, will be more likely to spend their money which keeps existing businesses afloat and allows innovative ones to grow.

It is also a myth to suggest that always more regulation equates to more barriers to innovation. If firms are continually allowed to mislead customers about the quality of their products and services, the likely trajectory of consumer confidence levels is not upwards. This new Duty should reward firms that do the right thing, which should encourage more to up their game and in turn promote competition and innovation in the consumers’ interest. Having the right consumer protections is always important. Customers shouldn’t need to endure interminable phone calls or email chains just to get justice. But at a time when the cost of living crisis is squeezing household budgets more tightly than ever before, it’s essential that customers feel like the law is on their side.

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