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By Kevin Peachey
Cost of living correspondent

17 minutes ago

*Image source, Getty Images*

**New rules for consumer protection across financial services to ensure people are treated fairly have come into force.**

The new Consumer Duty is supposed to ensure people are served by financial products they can understand. It aims to end hidden charges, and ensure providers of products such as savings accounts and mortgages inform people of any better deals available. But commentators say some businesses are ill-prepared for the changes. The reform is being overseen by the UK’s financial watchdog, the Financial Conduct Authority (FCA), which says it will raise the bar on help for vulnerable people and offer fair value to savers. The shift comes after a complex rewriting of some of the FCA’s rules for the 60,000 financial firms it regulates, for which companies have had a year to prepare. At their heart is a requirement that firms provide products that meet their customers’ needs, and ensure adequate support is provided as and when people need it. That should be seen in shorter waits and suitable responses when customers call a company on the phone, and the end of rip-off fees.

Nisha Arora, from the FCA, said: “The duty raises the bar across all corners of finance and will ensure firms equip their customers with information they can understand, services they need and the right support when they need it.”

The FCA said it should also help people like Samantha, who was a victim of financial domestic abuse. Her ex-husband had opened two overdrafts worth ┬ú1,000 in her name.ÔÇ»”I was asked multiple times on different calls to give my bank card number, balance and details of recent transactions, but I had no access to these accounts. There was no understanding or empathy at all,” she said. “I’m very lucky that I have a strong network of support around me. I can’t imagine how hard it is for people who don’t have any support because even with it I was pushed to my limits.”

The FCA said that there should be understanding and flexibility from staff in such circumstances, and products should be designed with such needs in mind. It said its research suggested 7.4 million people unsuccessfully attempted to contact one or more of their financial services providers over a 12-month period, with the most vulnerable in society most likely to struggle. However, there have been questions raised about whether firms are suitably prepared for the changes.

Andrew Stevens, from services company Quadient, said that many banks were still failing to effectively communicate with customers. For example, its research suggested that only 8% of consumers could fully understand updated overdraft charges.

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Introduction:

New rules for consumer protection across financial services have come into effect to ensure fair treatment of people. The Consumer Duty, overseen by the Financial Conduct Authority (FCA), aims to eliminate hidden charges, promote better communication, and provide information about improved financial products. However, there are concerns that some businesses are not adequately prepared for these changes.

The Consumer Duty and Its Objectives:

The primary goal of the Consumer Duty is to guarantee that individuals are served with financial products they can comprehend. By ending hidden charges and ensuring that providers notify customers of better deals available, the Consumer Duty aims to enhance transparency and fairness in financial services. The FCA, as the regulatory body, believes that this reform will elevate the level of assistance provided to vulnerable individuals and offer equitable value to savers. The FCA has spent a year rewriting its rules for the 60,000 financial firms it oversees, emphasizing the need for products that align with customers’ requirements and prompt support when needed. The intention is for customers to experience reduced waiting times and receive appropriate responses, effectively eliminating exploitative fees.

The Impact on Individuals:

The Consumer Duty is expected to have a positive impact on consumers, particularly those who have suffered from financial domestic abuse. For instance, Samantha, a victim of financial domestic abuse, faced challenges when her ex-husband opened two overdrafts in her name. During multiple phone conversations, she was repeatedly asked to provide information she did not have access to. Lamenting the lack of empathy and understanding, Samantha acknowledged the importance of having a strong support system, recognizing the difficulties faced by those without one. The FCA emphasizes that staff should exhibit empathy, flexibility, and understanding in similar cases. Additionally, financial products should be thoughtfully designed to cater to the unique needs of vulnerable individuals. Research conducted by the FCA revealed that 7.4 million people unsuccessfully attempted to contact their financial services providers in a year, with the most vulnerable segments of society being the most affected.

Challenges and the Role of AI legalese decoder:

Despite the potential benefits, concerns have been raised regarding the preparedness of businesses to comply with the new rules. Andrew Stevens, representing services company Quadient, has noted that many banks still struggle to effectively communicate with customers. This is further supported by research indicating that only 8% of consumers fully understand updated overdraft charges. In such a dynamic regulatory landscape, businesses need tools like AI legalese decoder to navigate the complexities of legality and compliance. AI legalese decoder can help firms understand and translate legal documents into plain language, ensuring that communication with customers is clear, concise, and comprehensible. By utilizing AI-powered technology, financial institutions can enhance customer engagement, improve comprehension of regulatory requirements, and comply with the Consumer Duty more effectively.

Conclusion:

The implementation of the Consumer Duty signifies an important step towards fair treatment and improved consumer protection in financial services. While challenges remain, businesses can leverage AI legalese decoder to simplify legal language, enhance communication, and meet the expectations of the Consumer Duty. By embracing these changes and utilizing innovative technologies, financial institutions can foster trust, transparency, and better customer experiences in the evolving landscape of consumer financial protection.

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