New rules aim to give financial product consumers a better deal04/08/2023 // No Comments
It may have passed unnoticed by some this week but the new Consumer Duty rules implemented by the Financial Conduct Authority are a big development for those who offer regulated financial products – for instance, prepaid funeral plans.
The rules came into force on Monday, 31st July, and give financial service providers three new responsibilities, which are: to act in good faith towards customers, avoid foreseeable harm and support customers to pursue their financial objectives.
SAIF members who are ‘appointed representatives’ of prepaid funeral plan companies should have received communications advising of actions, if any, that they need to take as a result of the new regulations.
For those who are unclear as to what the three responsibilities entail, this article in The Sun featuring Fairer Finance’s managing director James Daley should prove helpful.
The content summarises four areas where financial service providers will need to make improvements to their processes. These are: clearer communications; fairer terms; fewer hidden costs; and stronger rights to complain when things go wrong.
Daley, who worked alongside SAIF in the Funeral Service Consumer Standards Review, told the newspaper that the clearer communications aspect of the new rules could see companies “completely rework” their terms and conditions to make them “shorter and easier” for consumers to understand, while supporting people to make the right decisions.
“For example, instead of just getting a letter a month before your car insurance renewal, you may start to get a follow-up email and text message – to help remind you that you need to act,” he said.
Daley also explained that under Consumer Duty, businesses were obliged to make sure that customers paid a “reasonable” amount for a product or service. This, he said, would “require a comprehensive assessment of product features and an accurate assessment of price versus the market”.
With regard to fewer hidden costs, prepaid funeral plans should be well placed to meet this new rule, given the recent regulation of the market.
However, firms should be mindful of enticing offers that ultimately lead some people into unmanageable payment agreements. “Add-ons” that customers don’t really need could also decline, according to the article.
Finally, Daley said the Consumer Duty’s “higher expectations” of providers could mean that fewer firms end up before the Financial Ombudsman, as customers would now be able to quote sections of the Duty to a business that fails to meet the new rules.
SAIF will pay close attention to the impact of the rules on financial products in the funeral sector and will be sure to raise concerns if there are any negative outcomes for bereaved people and the professionals who care for them. Further information about Consumer Duty can be found here.