The Financial Conduct Authority (FCA) has defended its flagship Consumer Duty policy as going ‘significantly beyond’ Treating Customers Fairly (TCF) as it aims to create a culture shift within the industry.
The regulator also noted that while the insurance sector had less work to do than other markets following initiatives over the last few years, the sector should not “put its feet up”.
Speaking at the Association of British Insurers (ABI) Achieving good outcomes under the Consumer Duty webinar, FCA director of insurance Matt Brewis said the initiative will drive the regulator’s interventions over the coming years and be “a significant shift from where we are today”.
Defending the extent of the incoming duty, Brewis said: “One of the things I hear is this is just a rebadged Treating Customers Fairly agenda. I don’t think that is the case.
“There are significant elements of the Consumer Duty that are embedded in TCF, but this goes significantly beyond in terms of our expectations of firms and what we’d like customers to receive from firms.
“So with more financial decisions in consumer hands and with the changing digital landscape we believe now is the right time to be setting this higher standard for consumer protection.”
Brewis argued that the regulator wanted to be a positive for firms, for it to enable competition around higher standards.
He emphasised it was a move away from prescriptive rules to outcomes-based rules which allow firms to adapt, thrive and innovate in new ways of serving their customers and “with certainty of what is expected from you from the regulator”.
He added: “We want firms to be clear about the changing culture and behaviour that we want the Consumer Duty to bring about.”
‘Don’t put your feet up’
Brewis noted that implementation of the new rules may be easier for some parts of the financial services industry than others.
He explained it was “no accident” that many of the new rules already applied to a vast swathe of the insurance industry as some of the team heavily involved in writing the Consumer Duty have been working on insurance pricing and governance rules.
“All of those have gone a significant way to delivering what we see the new Consumer Duty delivering,” he said.
He added: “One of the things I’ve said before is general insurance (GI) is kind of the vanguard of financial services.
“For other sectors there is a significantly longer journey ahead for the implementation of the new Consumer Duty then there is for those in GI – but don’t put your feet up.”