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Entrepreneurs wanting to invest in the financial world will have more protection from today.
From July 31, people selling you financial products will have to be a lot more careful when they make their pitch.
Low trust in finance.
For many years there’s been complaints by customers of low trust in the financial services industry with its plethora of products – many of which you don’t need.
Now the industry watchdog Financial Conduct Authority – which regulates 50,000 firms – is prepared to spend more than £2.4 billion implementing new rules to safeguard customers.
New rules to protect you.
These new rules are called the Consumer Duty. In a nutshell, they will ensure the consumer gets support, clear communication, and products and services that offer fair value.
“We’re closely monitoring how firms are putting our new rules in place and will take action against those who are not following them, “ says the FCA in a statement.
In more detail, the onus will be on financial firms to:
- Ensure it is easy to switch or cancel your product.
- Make sure important information is not buried in lengthy terms and conditions.
- Offer the products that you want rather than pushing those you do not need.
- Provide fair value so you aren’t ripped off or paying unexpected costs.
- Firms to consider if you’re in a vulnerable position through poor health or financial troubles.
“This is only the end of the beginning.”
The new rules will be a major step for most firms in practice, Jonathan Herbst, global head of financial services regulation at Norton Rose Fulbright law firm, told Reuters.
“Even so, everyone recognises that this is really only the end of the beginning, and there is considerable uncertainty about how it will be interpreted and enforced by the FCA,” he said.
“It essentially moves the burden of proof from the regulator to prove detriment, to the firm to say you must be able to evidence good customer outcomes,” said Philip Deeks, head of KPMG‘s regulatory insight centre.
If you are unhappy about financial dealings, you can take your complaint to the Financial Ombudsman Service. The good news for many startup entrepreneurs is that the FOS has a service tailored to small businesses.
