Bosses at City firms could face fines for failing to prioritise consumers
Senior bosses at City firms could face fines and have their bonuses docked if they fail to put consumer needs first, in one of the biggest overhauls of financial regulation in a decade.
Rules being rolled out by the Financial Conduct Authority (FCA) will force financial firms – including banks, insurers and investment firms – to focus on delivering “good outcomes” for customers, in a move expected to reduce call wait times, end rip-off charges and fees through clearer promotions, and make it easier to cancel or switch investments.
The new consumer duty, which will start to come into force from next summer, will replace current rules that say firms must treat customers fairly.
The regulation will put greater responsibility on senior managers and directors to ensure the rules are applied. It will mean tying manager’s bonuses to those outcomes, and placing them at risk of fines if the rules are breached.
“Our new consumer duty is going to fundamentally change industry behaviour by setting higher and clearer standards of consumer protection,” said Sheldon Mills, an executive director at the FCA. He said it would “advance credibility and the stature of [the] financial services industry” in the UK.
“Where we identify serious misconduct that breaches that duty, we will use our full range of powers to tackle that … issuing fines, removing permissions and securing redress for consumers,” Mills said. “And we will hold firms, including senior managers and boards, to account for delivering these outcomes.”
Companies will be expected to produce an annual report outlining how they are putting consumers first and meeting the new requirements, though these will only be available to the regulator on request and will not be released to the
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