Credit Management September 2023

SEAN FEAST FCICM
MANAGING EDITOR
Editor’s column
Blowing the whistle
on the new Consumer Duty
ACCORDING to the recent
Financial Lives survey by
the Financial Conduct Authority
(FCA), less than half
of us have any confidence
in our financial services
providers, and only a third believe that
banks, lenders, insurance providers etc are
honest.
I don’t know whether those figures surprise
me based on my own experience of
the financial services sector since becoming
a grown-up 40 years ago, or whether
they just depress me. Given that I’m not
usually given to melancholy, I’ll stick to
‘surprise’; actually, I thought the percentage
would have been higher.
I recall a hugely frustrating hour spent
on the phone to NatWest a few years ago
and steadily losing the plot, at which point
I was told not to become ‘abusive’ for uttering
the phrase ‘bloody hell’. Given the bank
was a client of mine at the time I found this
rather amusing, since I had written the
script for its ‘abusive caller routine’ which
I proceeded to trot out verbatim, much to
the call handler’s consternation. I would
have loved to have listened back to that
interaction, assuming the bank had in fact
carried out its threat of recording some
calls ‘for training purposes’.
But I digress. The FCA, in response to the
slight upon its charge, has come up with
the Consumer Duty which fundamentally
requires firms to act in good faith towards
retail customers, avoid foreseeable harm,
and enable and support retail customers
to pursue their financial objectives. The
purpose, according to the FCA’s Sheldon
Mills, is to build trust in the system, starting
with basic customer communication
(see article page 24). Under the Duty, firms
will have to provide products which are fit
for purpose, offer fair value and work as
the customer expects. Brilliant.
Some firms don’t know if the new Duty
applies to them, and if it does, what they
need to change. Others are much better
prepared, and/or feel the latest initiative
is little more than an extension of Treating
Customers Fairly. My difficulty with the
Duty is more fundamental than that.
The FCA was created to protect consumers
more than a decade ago. If consumers
have less trust in the system than they have
ever had before, then this has happened
on the Authority’s watch. Trust evaporates
very quickly and takes many years to rebuild.
It should have been the very first
thing on the FCA’s ‘to do’ list.
But I doubt it will succeed. It will be
much like the Football Association’s ‘Respect’
campaign. They’ll tell you it has been
a great success, but I have experienced its
derisory failure first-hand and it was the
reason I quit refereeing. They focus on the
wrong things. It’s all smoke and mirrors.
And history will repeat itself with the FCA.
Expect in the next two years, a few minnows
hung out to dry and made an example
of, with much trumpet and fanfare to
show how tough the FCA is being, while
the big boys continue doing what they’ve
always done. Plus ça change.
Brave | Curious | Resilient / www.cicm.com / September 2023 / PAGE 3