Trust and Consumer Protection

Sarah Lawrence

Sarah Lawrence

Sarah has spent over 20 years of experience in the financial services industry, including over 16 years working at the Financial Ombudsman Service. Sarah specialises in customer service and complaints handling, with extensive experience of management and mediating complaints and is dedicated to passing on her knowledge and experience to businesses to improve complaints handling, customer service and consumers’ perceptions of the industry.

We often talk about gaining or earning someone’s trust, but the interesting thing about those phrases though, is that as human beings we tend to, in most aspects of our lives, trust first, until such time that we are given cause not to. This means that instead, our starting point should be that consumer trust in us is ours to protect or risk losing.

Gaining or earning trust happens when trust has been lost and needs to be rebuilt and regained. However, trust is not a one-size-fits-all, linear concept. As consumers, we may mistrust financial services (every bit of research unfortunately tells us this is still prevalent) but we can still trust the firm and/or advisor we have a relationship with. And, we will trust them until such time that we are given cause not to. Trust easy to lose, whereas regaining and rebuilding trust takes significantly longer to achieve.

So, with that information, has anyone else noticed the change in tone coming from the FCA over the last couple of years around trust and consumer protection?

There’s a thread starting to appear, in between different parts of the handbook, and, now this thread is being pulled in, gently but firmly, bringing areas of the handbook – that would never normally have been thought of as having any kind of link to each other – closer together. So, what is this invisible thread, and what does that mean for us?

It represents the overall ‘feel’ that the FCA is giving out about wanting real change to happen, and the moves it is now making to put in place the necessary framework to facilitate this.

It all started with the FACs’ business plan back in 2019, when it started to talk about wanting to see a real change in culture within financial services industry. Of course, 2020 didn’t quite turn out as anyone planned and we all had other challenges to face, but now this voice and this want from the FCA is getting increasingly louder. 

Is this about Covid-19? Probably not. This is something the FCA have been working towards now for several years now. Its annual report if you missed it, talked about the need for the FCA to change and develop regulation for the future, identify harm and intervene in a more timely manner. A message that was firmly reinforced in a speech made in May this year by Charles Randall, Chair of the FCA and PRA.

My sense is that for a while now, the FCA has been taking stock and watching the industry to see what it’s been doing and how it’s been behaving – particularly around the principle of ‘Treating Customers Fairly’ (TCF). And I don’t think it’s been that comfortable with the results. The FCA has felt it necessary on a number of occasions now to intervene and take action in certain sectors and with certain firms to prevent consumer harm – and it’s not just in consumer credit arena, general insurance and the issue of claims management phoenixing have also blipped loudly of late on the FCA’s radar.

man in a dark business suit holding icons of a group of people in a protective bubble

In my last blog, I talked about the FCA measuring its performance against its KPIs. And, towards the end of my blog, I mentioned two very specific KPIs that had been in the background and having an increasing influence on what we see from the FCA today. They are the FCA’s performance on its regulatory decisions and customer feedback.

This certainly helps to go some way to explain why the FCA has proposed a new Consumer Duty – a duty, the FCA says, which will require firms to provide a higher standard of care than that previously set under Principle 6 (TCF).

The FCA has been very clear in saying that the reason for proposing this new duty is that despite TCF, it is still seeing consumer financial detriment and harm, with customers not being able to use the products or services in the way they need to, and it having to step in when it shouldn’t have to.

The FCA wants to move away from firms following the ‘right’ processes and ticking boxes, to ‘right customer outcomes. And it wants the new duty to be in place sooner rather than later.

If you haven’t already read its’ consultation paper on the new consumer duty I’d strongly recommend you put it on your ‘must-read’ list. This higher standard is going to require a seismic shift across the financial services industry – and for many firms, a change in culture and in approach towards customers and the products and services that firm offers.

The question is, will your firm be ready?

This is the final blog in this series, where we have focussed on outcomes, so to ensure you don’t miss out on any of our upcoming blogs – Click here to join more than 10,000 other subscribers and keep up to date with our latest news, products and publications.


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