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Consumers get new protection from financial service rip-offs | City & Business | Finance
Nisha Arora, Director of Cross-cutting Policy and Strategy at the FCA (Image: FCA)
A new consumer duty has come into force, setting a higher bar for financial firms and giving customers more certainty that the product they are taking out does exactly “what it says on the tin”.
Overseen by the Financial Conduct Authority (FCA), it sets higher and clearer standards of consumer protection across financial services, requiring firms to put customers’ needs at the heart of what they do.
The impacts of the new duty wfiill be far-reaching, weaving through the design of financial products through to the way firms treat their customers.
Over time, it is hoped the duty will improve trust and confidence in financial services.
It could help to prevent rip-offs, unexpected charges, and potential future mis-selling scandals from happening in the first place.
Under the duty, firms will have to provide products which are fit for purpose, offer fair value and work as the customer expects.
The duty could also potentially help prevent people from being sold unnecessary “add-ons” to financial products, stopping them from wasting money.
Firms should also be able to explain and justify their pricing decisions.
Nisha Arora, director of cross-cutting policy and strategy at the FCA, said: “People should know what they are paying and know what they are getting for what they pay.”
Asked what consumers will see from the higher standards, Ms Arora said firms will have to actively support and enable their customers to achieve their financial objectives.
New consumer duty gives more financial product performance certainty to consumers (Image: Getty)
“It’s about helping their customers, rather than just sitting back,” she told the PA news agency.
“If we translate that into practice and the whole consumer journey, if I want a product or a service, I will know that it’s fit for me, it’s fit for use, it’s the right thing for me and it offers fair value, so I’m not being ripped off.
“I will also get communications at the right time, and that I can understand and can help me make decisions.
“It’s really important consumers still shop around for the best deals, but firms need to give them the right information so they can make those decisions.”
Firms will have to provide helpful and responsive customer service under the duty and be timely and straightforward in how they communicate.
Processes for complaining, switching and cancelling products should also be straightforward.
Ms Arora said: “What we want (firms) to do is make it as easy to switch, complain, move product or service, as it was to come in, and not have to go through all those hoops and hurdles to make things happen.”
There have been some recent signs of firms improving their savings offerings ahead of the duty, following criticism from various sources that rate rises were not being passed on quickly enough.
Under the duty, the FCA expects firms to have a strategy to keep savers adequately informed of available rates across their products and how they may benefit from switching to an alternative.
Together with the Information Commissioner’s Office (ICO), it recently wrote to UK Finance and the Building Societies Association (BSA), clarifying that savings providers can inform their customers of the best rates available to them, even where they have objected to direct marketing.
Ms Arora said: “In all markets, including in the savings market, the consumer duty will require all products to be fair value. If there are different groups of customers, each of them have to get fair value.
“They might have different rates, but they all need to be fair value. And importantly, the communications need to be there to enable and support customers. (Firms) have to give them the right information.
“If someone is on a lower rate, they should point them to better rates that may be available. Now, it’s up to the customer to decide what to do and they need to shop around.”
Vulnerable customers’ needs are also at the heart of the new duty.
The FCA’s financial lives survey previously indicated adults with characteristics of vulnerability were more likely to report that customer support services did not help them at all to achieve what they wanted to do.
Ms Arora said firms will be expected to understand the needs of vulnerable customers, adapt and be flexible.
She said: “It might be around designing products that are suitable for the market, it might be around communicating in a particular way that’s helpful and supportive.”
Asked whether there might be a risk that firms could be more inclined to “screen out” some customers for products, Ms Arora told PA: “We’ve taken this very seriously because what we don’t want is unintended consequences with products either being withdrawn from the market or customers being declined appropriate products.
“If a product, though, is unaffordable or not appropriate, then obviously we don’t want it to be offered to the customer.”
She said the regulator has already taken several steps, including being very clear and supporting firms, so “actually these are higher standards, but they are achievable by firms”.
Ms Arora also pointed out the communications requirements for firms under the new duty will help consumers to access products.
Businesses have been gearing up for the new duty, and the regulator expects firms to have had clear oversight, from the top, of their implementation plans.
The FCA has been supporting firms with guidance, webinars and letters.
Ms Arora said: “I’m really pleased by the progress that many firms have made in getting ready for this. But we will be ready to enforce if we see non-compliance that drives harm, and creates harm, for consumers.
“We have started our monitoring and we will be continuing to gather data from firms. We will be ready to supervise and enforce to make sure that the duty really is driven home.”
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
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US President Donald Trump will pay a state visit to China from May 13 to May 15 at the invitation of Chinese President Xi Jinping, a spokesperson from the Chinese Ministry of Foreign Affairs (MFA) said.
Senior US officials have indicated the meeting between both leaders will address several high-stakes topics, including Taiwan, Iran, AI technology and nuclear arms. The talks are also expected to focus on whether both nations will continue their strategic critical minerals pact, according to Reuters.
After more than half a year without direct talks, the leaders of the United States and China are preparing for a face-to-face meeting aimed at preventing further deterioration in ties strained by trade tensions and geopolitical conflicts, including the US-Israeli conflict with Iran.
Trump is expected to land in Beijing on Wednesday. This is the first time in nearly a decade that Trump will be visiting China.
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Trump-Jinping Meet: What To Expect?
https://x.com/ANI/status/2053660557723783608?s=20
Economic relations are likely to dominate talks between Trump and Xi Jinping, with both sides expected to explore greater investment opportunities. Washington has recently pushed what strategy analysts refer to as the “Five B’s”, centred on Chinese imports of Boeing jets, US agricultural products such as beef and soybeans, and the formation of trade and investment panels designed to separate low-risk economic cooperation from sensitive security issues, reported The New York Times.
Beijing’s negotiating priorities have centred around the “Three T’s”: tariffs, technology and Taiwan, with China maintaining its longstanding claim over the island. Chinese officials are expected to seek continuation of the trade truce reached last year while urging the United States to relax restrictions on advanced chip exports that China sees as vital for economic and industrial progress. Jinping is also expected to raise concerns over Washington’s ties with Taiwan during discussions with Trump.
According to an official cited by Reuters, US and China may formally introduce plans for new trade and investment bodies at the upcoming meeting, but the mechanisms would likely need additional refinement before implementation. Discussions are also set to include the future of the trade ceasefire that currently permits the export of Chinese rare earth minerals to the US, although it remains uncertain whether an extension will be agreed upon this week.
A senior White House official, speaking to reporters on condition of anonymity on Sunday, indicated that Trump could push China more aggressively over its economic dealings with Iran, including oil purchases and the supply of products that may have both military and civilian uses. The comments came days after US Treasury Secretary Scott Bessent alleged that China was “funding” Tehran, Al Jazeera reported.
China’s relationship with Russia could emerge as another major topic during the talks.
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“The President has spoken multiple times with General Secretary Xi Jinping about the topic of Iran and about the topic of Russia, to include the revenue that China provides to both those regimes, as well as dual-use goods, components and parts, not to mention the potential of weapons exports. I expect that conversation to continue,” an official said as per Reuters.
Trump has frequently highlighted his personal rapport with Xi Jinping, often referring to him as “a friend”, while signalling hopes of attracting increased Chinese investment into the United States. However, analysts remain sceptical that the talks will produce a sweeping economic breakthrough, with more limited agreements and an extension of last year’s trade truce viewed as the most realistic outcome.
“The entire world will be hoping that the two leaders can reach agreement on at least a subset of issues … and find ways to prevent any further escalation of tensions on the remaining ones,” Eswar Prasad, professor of economics at Cornell University, told CNBC.
The previous face-to-face meeting between Trump and Jinping took place in South Korea last October, where both leaders agreed to halt an escalating trade conflict marked by steep US tariffs on Chinese imports and Beijing’s threat to curb rare earth exports.
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Aviation stocks tumbled after the opening bell on Monday, May 11 following Prime Minister Narendra Modi’s appeal to citizens on avoiding foreign travel, adopt Covid like measures and save fuel in light of the ongoing crisis in the Middle East.
So far, Interglobe Aviation, IndiGo’s parent lagged the most, trading 4.44% lower at Rs 4,322 apiece, followed by SpiceJet, which dropped 4.15% to Rs 13.41 and GMR Airports fell 3.67% at Rs 97.6 per share.
The recent dip comes after PM Modi appealed citizens to help conserve foreign exchange reserves, save fuel and avoid unnecessary foreign travel, overseas vacations and foreign weddings. Additionally, he urged citizens to reduce petrol and diesel consumption by using metros and public transport wherever available, and opting for car-pooling when private vehicles are necessary.
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