City watchdog orders finance firms to put customers first

Firms will be forced to treat customers fairly in a major crackdown on shoddy service by the City regulator.

The Financial Conduct Authority (FCA) wants companies to put customers first – and those who fail to could face huge fines.

Under the proposals, firms will be banned from burying important information in the pages of small print and making it difficult for customers to leave.

Crackdown: The Financial Conduct Authority wants companies to put customers first – and those who fail to could face huge fines

Companies will have to provide consumers with information they can understand, offer products and services that are fit for purpose and provide helpful customer service.

The watchdog says the higher standards will drive a culture change in firms, and senior managers will also be held accountable.

The FCA estimates it will cost more than 50,000 firms up to a total of £2.4billion to adapt to new standards.

The crackdown would save customers billions of pounds –with up to £11.2billion saved by general insurance customers alone over ten years.

It is understood that the watchdog is keen to put a stop to misleading offers, including attractive savings rates that do not spell out that the interest on offer is subject to a series of restrictions.

Under the higher standards, consumers should find it as easy to switch, cancel and complain as it was to buy the product or service.

The regulator also wants to put a stop to firms exploiting customers purely to make money from commission.

The FCA says it has previously seen firms presenting information in a way that exploits consumers’ behavioural biases, selling products or services that are not fit for purpose, or providing poor customer support.

The regulator is consulting on the plans until February and expects to confirm any final rules by the end of July next year.

Firms will have to comply with the rules by April the following year.

Sheldon Mills, executive director of consumers and competition at the FCA, said: ‘Making good financial decisions is vital to financial well-being and trust, but too often consumers are not given the information they need to make good decisions and are sold products or services that do not offer the benefits they might expect.’

Matthew Upton, the director of policy at charity Citizens Advice, said that the crackdown should make companies think twice before going against the best interests of their customers.

James Daley, the managing director of consumer group Fairer Finance, added: ‘The FCA will still need to show its teeth with enforcements and name and shame companies that fail to comply in order to make it work.’

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