The primary objective of the Financial Conduct Authority (FCA) is to regulate and manage the conduct of financial services firms to protect customers from unfair treatment. This sector is one of the main contributors to the UK economy, so it's vital that consumers can trust them. The FCA have various enforcement powers and responsibilities to help them control the compliance of these businesses and protect consumers.
The FCA supervises over 59,000 firms, using their '6 Consumer Outcomes' as criteria to measure and regulate each company's conduct. These outcomes represent the standards of conduct that all firms must follow to meet regulatory obligations. Businesses must provide evidence that all 6 consumer outcomes are being met, to avoid supervision or penalties enforced by the FCA.
Consumer outcome 1
The fair treatment of customers must be central to your business' corporate culture. These values must be embedded throughout every department and activity executed by your company, which means senior management teams must actively endorse a customer-centric code of conduct.
Example: Collaborative reviewing and automated workflows can help to ensure that compliance is considered at every stage in business procedures. For example, it's important to bear in mind that each team has the same goal: to make sure the firm promotes itself in an effective way that meets regulatory requirements. If you want to embed compliance into your business' collective ethos, it needs to be something everyone takes responsibility for.
Consumer outcome 2
Products and services marketed and sold in the retail market must be designed to meet the needs of identified consumer groups and must be targeted accordingly. This means:
- Ensuring products and services are targeted at the right markets and consumers to avoid mis-selling
- Periodically reviewing complaints and claims management information
- Collecting and analysing information to assess the performance of the distribution channels
Consumer outcome 3
Consumers must be provided with clear information and kept appropriately informed before, during and after the point of sale. There are several ways to ensure this; for example:
- Before the sale: Avoid small print or jargon. Product features or limitations must be communicated to customers through your distribution channels
- Point of sale: Point of sale information must be clear and help customers to decide if the product meets their requirements
- Post sale: Post-sale information must make consumers aware of product performance, opportunities to act, and any changes in the terms and conditions.
Consumer outcome 4
Where consumers receive advice, the advice must be suitable. This means any guidance offered must consider their unique circumstances.
Example: Joshua is self-employed and takes out a loan. The loan provider recommends a Payment Protection Insurance (PPI) policy, which would protect his monthly payments in the event of unemployment, sickness or an accident. However, this advice wasn't appropriate for Joshua, as to qualify, a self-employed person would need to completely cease working and relinquish their self-employed tax status. This should have been raised before the loan was sold. It was not Joshua's responsibility to read the small print of his policy documents to check that it was suitable. You must ensure that any advice you give is suitable, relevant and takes account of the customer's circumstances.
Consumer outcome 5
Consumers must be provided with products that perform as they have been led to expect, and the service they receive is of an acceptable standard. Organisations must regularly review products and feedback from consumers. High numbers of claims and complaints may indicate that customers are not being treated fairly. Buyers must be made aware of potential market risks for products. Consumers can still be treated fairly if the product they purchase performs poorly. However, it isn't fair if consumers are misled about the possible performance of a product.
Example: Many businesses have started to pay closer attention to their customer satisfaction levels to improve their service and products. Encouraging reviews and feedback through webpages such as 'Trust Pilot' or 'Trip Advisor' for restaurants means that product and service features, risks and benefits are communicated regularly and accessibly.
Consumer outcome 6
Firms must not impose unreasonable post-sale barriers on consumers who change product, switch provider, submit a claim or make a complaint. Customers should be able to change products or switch providers without excessive penalties. It must not be difficult for consumers to make claims or complaints. Complaints are a valuable source of feedback and an early warning of failures in service delivery. The way you handle complaints can enhance or damage your reputation.