Skip to content
Search

Latest Stories

Consumer duty puts the onus on firms to deliver good outcomes for consumers: FCA CEO Nikhil Rathi

The FCA plans to introduce the consumer duty on 31 July 2023.

Consumer duty puts the onus on firms to deliver good outcomes for consumers: FCA CEO Nikhil Rathi

UK financial watchdog boss has said that the consumer duty, which will come into force on 31 July 2023, puts the onus on firms to act to deliver good outcomes for consumers.

"Parliament debated and explicitly mandated the consumer duty due to falling public confidence in retail financial services. It urges firms to act in good faith, avoid causing foreseeable harm and support customers to pursue their financial objectives.The duty leads firms to consider what that looks like and to take decisions in good faith," said Nikhil Rathi, CEO of the Financial Conduct Authority (FCA), while speaking at the UK Finance Annual Dinner on Wednesday (16).


Rathi revealed that there is no need for the deadlines to move again as "firms are on track".

Introduced by the FCA, the consumer duty aims to deliver higher and clearer standards of consumer protection for retail customers of financial services and requires firms to put their needs first.

"Firms must also give customers information that they can understand, point customers to products, services and post-sales support that meet their needs and offer fair value. These principles are not controversial. After extensive feedback, we introduced a phased. deadline to help firms embed what is undoubtedly a major cultural and operational shift," Rathi said.

"We will remain pragmatic in our oversight of implementation and ask for continued openness from firms on their implementation path. We also chose not to attach a Private Right of Action to the duty. Some parliamentarians and consumer groups wanted us to go further but we believe our reforms strike the right balance," he added.

The FCA boss said that the watchdog has set measurable targets such as reducing the number of complaints going to the Financial Ombudsman Service.

"As the FOS has made clear, the duty does not have a retrospective effect and will not apply to past actions by firms. Conduct will be judged on the rules and standards that were in place at the time. Another quantifiable target is to see an increase in the levels of trust for financial services in our regular survey evidence," he said.

"We will monitor how the duty is working and look forward to hearing from you, about changes we can make to further simplify our rule book going forward. We want to work closely with you so that the consumer duty can help shape a framework for use of artificial intelligence and other new technologies."

Rathi said that the duty will also allow to move more quickly to facilitate new developments, including AI, across sectors. It will help us manage the entry of Big Tech firms into the UK retail financial service, ensuring a level playing field.

According to him, AI can help solve some of the issues such as spotting the signs of vulnerability, tailoring products to individuals and receiving accurate customer feedback and data.

"The CEO of a Japanese insurance firm recently said that the data they use can predict the weather and foresee natural disasters,and for consumers spot early signs of dementia, a development which I am sure will be of interest to our fellow guest this evening from the Alzheimer’s society.  A future insurance policy would pay out on the first sign of dementia as well as use data to encourage customers to change their lifestyle to stave off its onset for several years," Rathi said.

"At a conference hosted by our Dutch colleagues in Amsterdam this year, I heard from a chief technology officer of a major bank who said their firm had piloted an AI tool that could predict with 99 per cent accuracy a customer’s bank balance in a year’s time. When customers were presented with this innovation, they did not want the product integrated into their banking app. From masters of the universe to demi-gods of data, financial and Big Tech firms will wield huge power over the direction of our lives."

He said: "Another principle which we can work on under the framework of the consumer duty is that agency must not be attributed to AI systems or algorithms, as these risks removing accountability away from firms. Safe and responsible adoption of AI will always be underpinned by the quality of data."

He assured that consumer duty has a particular focus on vulnerable consumers and taking reasonable steps to ensure informed decision making.

"We want to see banking hubs and alternative forms of provision accelerated and also for people and small businesses to be supported in moving to digital, where branches close in community. While the consumer duty will help firms and consumers in future navigate the cost-of-living crisis, we remain focussed on what is happening on the ground today including how consumers are being treated," the CEO said.

He further said that the FCA wants to to bring the Financial Service Compensation Scheme down and to reduce cost for small businesses. The scheme provides protection for customers of failed financial services firms.

The scheme is the UK's statutory deposit insurance and investor compensation scheme for authorised financial services firms' customers. The FSCS can compensate a company if it is unable or likely to be unable to pay claims made against it.

While mentioning about the plans to make the UK a global crypto hub, Rathi said that ministers were explicit the way to achieve this was to move fast while applying high standards of protection, citing our work around Anti-money laundering (AML) registrations, sanctions and the push for greater powers over financial promotions.

"We pioneered the regulatory sandbox with UK firms, now copied around the world. We are the first regulator to directly support early and high growth potential firms. Earlier this year we held our first crypto sprints – getting industry, legal experts and academics together to work at pace on how future regulation could and should work. Through our chairmanship of the Global Financial Innovation Network (GFIN), we are about to launch a new sprint enabling firms to trial and scale new tech across multiple jurisdictions, focussing on ESG, supporting global market access.

"Together, we will make sure the UK is the best place in the world to do financial services business."

More For You

Sri Lanka forms committee to address UK sanctions
Anura Kumara Dissanayake

Sri Lanka forms committee to address UK sanctions

THE Sri Lanka government on Wednesday (2) formed a committee to recommend measures regarding the UK's decision to impose sanctions on three former military commanders who led the campaign that crushed the Liberation Tigers of Tamil Eelam (LTTE) in 2009.

Health minister Nalinda Jayatissa told reporters that foreign minister Vijitha Herath, justice minister Harshana Nanayakkara and deputy minister of defence Aruna Jayasekara would comprise the committee that would consult experts for the purpose.

Keep ReadingShow less
Gujarat-blast-ANI

The blast caused the factory’s concrete roof to collapse, scattering debris and body parts across the area, officials confirmed. (Photo: ANI)

ANI

Death toll rises to 21 in Gujarat firework factory explosion

AN EXPLOSION at an illegal firecracker factory in Gujarat's Deesa town killed 21 people and injured several others on Tuesday, officials said.

The blast caused the factory’s concrete roof to collapse, scattering debris and body parts across the area, officials confirmed.

Keep ReadingShow less
Child benefit payments set to rise for UK families

Child benefit, normally paid every four weeks directly into bank accounts, has undergone significant changes in recent months (Photo: Getty Images)

Child benefit payments set to rise for UK families

MILLIONS of British families are set to receive a financial boost as child benefit payments increase from April 7, according to HM Revenue and Customs (HMRC).

From next week, parents will receive £26.05 per week for the eldest or only child, amounting to £1,354.60 annually - up from the current rate of £25.60. For each additional child, payments will rise to £17.25 weekly, totalling £897 per year - an increase from the present £16.95 rate. This represents a 1.7 per cent increase across all payment categories.

Keep ReadingShow less
Anant Ambani Walks 140 Km in Spiritual Tribute on 30th Birthday

Anant’s padyatra is a reflection of the larger cultural fabric of India

Getty

Anant Ambani embarks on a 140-kilometer spiritual journey on foot to celebrate 30th birthday

Anant Ambani, a director of Reliance Industries Limited and a prominent figure in Indian industry, has chosen a unique and spiritual way to mark his 30th birthday. As part of his celebrations, he is currently undertaking a padyatra—a traditional pilgrimage on foot—from Jamnagar to Dwarka, covering a distance of approximately 140 kilometres. The journey reflects his devotion to Lord Dwarkadhish, the presiding deity of the Dwarkadhish Temple in the city of Dwarka.

Anant began his journey from his family’s residence in Moti Khavdi, Jamnagar, and has been progressing steadily for the past five days. Walking an estimated 10-12 kilometres each night, he travels under the protection of Z+ security and local police, ensuring his safety during this significant journey. The padyatra is expected to take between seven to nine days in total, with plans to conclude at the Dwarkadhish Temple in time for his birthday on April 10.

Keep ReadingShow less
New TB action plan proposed as cases surge

Government urged experts to come forward to help draw up a new five-year TB action plan. (Photo: Getty Images)

New TB action plan proposed as cases surge

BRITAIN on Wednesday (2) urged health experts and sufferers of tuberculosis (TB) to come forward to help draw up a new five-year action plan as it deals with record rises in the disease.

In 2023, England recorded its largest annual increase (11 per cent) in cases since enhanced surveillance began in 2000.

Keep ReadingShow less