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UK financial regulator delays consumer protection reforms

Britain’s top financial regulator on Wednesday delayed long-awaited steps to protect customers, stopping short of banning charges, such as exit fees, that campaigners say are inherently unfair.

The Financial Conduct Authority has spent more than a year consulting with industries and consumer groups regarding proposals to end abusive charges, improve customer service and facilitate the cancellation of unwanted financial products.

The FCA said the “consumer duty” recommendations would be introduced in most areas of the 60,000 firms it oversees by June 2023, three months later than originally planned after industry pleas for more time.

Firms will have until June 2024 to apply the new protections to products no longer on sale, such as old life insurance policies, as the processes around such products were more complicated to update, the FCA said.

The rules will not apply to cryptocurrency investments or loans from buy-now-pay-later companies, areas ripe for abuse of consumer rights, as these are outside the FCA’s jurisdiction.

The FCA’s consumer and competition director Sheldon Mills insisted the new regime would bring significant benefits to the UK at a critical time, as consumers face The cost of living crisis Driven by rising food and fuel prices.

“The duty is going to fundamentally change industry behavior by setting higher and clearer standards of consumer protection,” Mills told reporters.

He rejected the suggestions according to which the renovation was an admission of the failures of the past regime which presided over the collapse of the mini bond company. London Capital Finance in 2019.

Under the proposals, companies must show they deliver good outcomes for customers and “avoid foreseeable harm” rather than just proving they treated people fairly. Mills said the reforms put Britain at the “frontline” of international consumer protection.

Companies will also need to ensure that it is as easy for customers to cancel a product as it is to buy it, as well as improve call waiting times and conduct audits to ensure that customers are not harmed by financial products.

According to the rules, companies will be required to produce annual reports demonstrating how they prioritize the interests of consumers.

Earlier drafts of the rules were criticized by activists for not being specific enough. The final package of measures does not include strict instructions in the matter, including waiting times for calls or the types of charges that should be prohibited.

“We can’t be absolutely prescriptive,” Millis said, adding that while the FCA wanted customer service waiting times to be shorter, they could be longer at certain times, for example, during system outages.

The regulator’s handling of exit fees – which apply to some mortgages and investment policies – will depend on whether customers were aware of the fees in advance and whether they are harmful.

The FCA will ask new firms to demonstrate they have systems in place to comply with the rules, using its “data-driven approach” to identify and take action when existing groups do not comply.

“Where companies have breached duty, we will use the full range of our powers to deal with that . . . and we will hold companies and boards to account for those outcomes,” Mills said.

UK financial regulator delays consumer protection reforms Source link UK financial regulator delays consumer protection reforms

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