The Financial Conduct Authority (FCA) will implement the Consumer Duty, a new regulation aimed at bolstering consumer protection in retail financial services on 31 July 2023.
This article explores the implications of the Consumer Duty for motor retailers and how they can prepare to meet the requirements.
What is the Consumer Duty?
The Consumer Duty is about cultural change in firms that puts the customer at the heart of the business. It will build on the existing ‘Treating Customers Fairly’ principle, but it will be far more wide reaching and encompassing. The cross-cutting rules are high level and not specific, allowing for interpretation and flexibility in how individual firms implement them. The overall focus will be on what an individual customer needs and wants.
Key Aspects for Motor Retailers:
Motor retailers must adapt to the new regulations and make necessary changes to align with the Consumer Duty. Here are the key aspects motor retailers need to consider:
- Motor retailers must prioritize customer needs, ensuring their products and services align with customer expectations.
- Motor retailers need to reassure customers that the product they are buying is good value and at a fair price for them.
- Motor retailers must evidence that customers have free access to support before, during and after their purchase.
To meet the requirements of the Consumer Duty, motor retailers should take proactive steps to prepare. The Consumer Duty will require retailers to evidence that their customers are receiving good outcomes and they are taking steps to achieve this. It will also require retailers to detail their negations with lenders and insurers about product design and suitability; ensure deal files are completed showing that customers have received and understood the information given to them; and to document reasoning for pricing structures. Staff training will also be key to ensuring retailers have the skills to ensure they are delivering what the Duty requires and consumers need.
The introduction of the Consumer Duty represents a significant change in the regulatory landscape for motor retailers. Adequate preparation and adaptation to the new regulations will position motor retailers for success in the evolving retail financial services market.
NFDA operates an informed and structured Finance & Insurance group, working closely with the FCA to equip businesses with the necessary tools for compliance. NFDA offers structured resources such as guidance documents, implementation plans, SWOT analysis, and GAP analysis to assist retailers in meeting the requirements of the Consumer Duty.
For retailers seeking assistance or further discussions on the implementation of the Consumer Duty, please reach out to Symon.Cook@Rmif.co.uk or contact the NFDA member helpline at 01788 538303.
