New consumer duty to be introduced on 27 July

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The Financial Conduct Authority (FCA) will unveil its new consumer duty policy on Wednesday 27 July.

All regulated firms, including peer-to-peer lending platforms, will be expected to comply with the new rules from this date onwards.

The consumer duty requires all firms to show that they are acting “to deliver good outcomes for retail clients.”

Where firms see evidence that consumers are not receiving good outcomes, the FCA expects them to “take appropriate action to rectify the causes.”

Read more: FCA proposes new consumer duty – here is how P2P lenders could comply

In a speech delivered yesterday to a Washington D.C. thinktank, FCA chief executive Nikhil Rathi said that the FCA “wanted to break new ground” with the consumer duty, and to ensure that all firms take more responsibility for the impact that their products and services might have on their consumers.

Regulated firms will be expected to regularly create and review reports on how they are meeting the consumer duty, and they must be prepared to share any of this data with the FCA if requested, or risk enforcement action.

Read more: FCA names new consumer finance head

Sheldon Mills, executive director of consumers and competition at the FCA, will deliver a statement on the consumer duty policy on Thursday 27 July, in which he is expected to outline the ways in which firms can ensure that they are compliant.

In the past, the FCA has made a number of suggestions which hint at how the consumer duty might work. It has told firms that they could analyse customer retention records to see why users are leaving, as this could signal poor treatment.

Regulated firms could also test digital promotions to assess consumer responses, as a way of learning what consumers are engaging with, and what they may not understand.

The FCA has also suggested that firms ask their customers for feedback on their services, to identify any trends in complaints. They could also use mystery shoppers, auditing, focus groups and deep dives to get impartial input on where their processes could be improved.

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