• Anastasiia Pervushyna, Director/MLRO at Sends.co


• 03.10.2023 10:12 am

The Financial Conduct Authority (FCA) has introduced new Consumer Duty requirements (from 31st July 2023), emphasizing customer protection and support in financial services.  The financial regulator wants to see firms deliver a higher customer care and protection standard and further equip consumers to make effective decisions in their interests. In this interview, Anastasiia Pervushyna, Director/MLRO at Sends, gave her opinion on how this regulation could reshape the financial industry. 

1. What is Customer Duty, and how do these rules apply to your daily work at Sends Company? 

Consumer Duty is a regulatory initiative by the UK's Financial Conduct Authority (FCA) to improve the relationship between financial institutions and their retail customers. It sets higher standards for how financial institutions interact with consumers, prioritizing their best interests and ensuring favorable outcomes, emphasizing essential support, clear communications, and tailored fair-value products. This helps consumers feel more confident and secure when dealing with financial institutions.

At Sends, these rules are at the core of our daily operations. We're dedicated to providing clients with a quality financial experience, and we've been doing so since 2017 in the fintech industry. Customer satisfaction is our top priority, and Customer Duty requirements align with our values and mission.

2. How do the recently introduced Customer Duty regulations differ from the previous regulatory framework? 

The new Consumer Duty represents a major shift in the regulatory landscape. Unlike the previous framework, it explicitly emphasizes firms' responsibilities to deliver good customer outcomes. 

The new Consumer Duty requirements include three key components:

Consumer Principle (Principle 12): This necessitates that firms prioritize delivering positive outcomes for retail customers. Also reflects the overall standard that the FCA expects firms to adhere to. 

Cross-Cutting Rules: These rules then further develop the Authority’s expectations for firms to deliver good consumer outcomes by applying the following requirements:

• Firms must act in good faith towards retail customers

• Firms must avoid foreseeable harm to retail customers

• Firms must enable and support retail customers to pursue their financial objectives.

Four Outcomes: Four Outcomes consist of Rules and Guidance setting more detailed expectations for firm conduct in four particular areas: Governance of products and services, Price and value, Consumer understanding, and Consumer support.

3. Why do you think these regulations were introduced, and do you believe they were influenced by factors such as economic crises or other specific reasons?

I believe these regulations were introduced to enhance consumer protection and rebuild trust in the financial services sector. We can't rule out the impact of economic crises and consumer harm incidents, but the primary goal is to establish a robust framework that places customers' interests at the forefront and prevents harm proactively.

4. What benefits can consumers expect from Consumer Duty, and how will they improve financial well-being?

Consumers can expect greater transparency, fairer pricing, and better-tailored products. This should improve financial well-being by reducing the risk of unsuitable financial products and services, ultimately helping consumers make informed and beneficial financial choices.

Additionally, consumers can look forward to accessible customer support. This ensures that resolving issues, switching products, or cancelling services is as straightforward as the initial purchase process. Furthermore, it aims to focus on specific customer groups, including those who share “characteristics of vulnerability” or “protected characteristics”, to ensure equitable outcomes for all.

5. What expectations does Consumer Duty place on companies, and what challenges do these requirements pose for businesses in the financial sector?

Consumer Duty sets clear expectations for companies in the financial sector, such as formulating customer-centric products and acting in good faith. In simple terms, that means avoiding hidden fees, misleading advertising, withholding vital information, ignoring customer complaints, etc. 

New Consumer Duty rules don't limit companies, they guide them toward providing precise, customer-centric products and services. However, these expectations come with challenges related to product redesign, increased oversight, cultural shifts, compliance, and data integration for businesses in the financial sector.

6. The FCA found that trust in financial services is low, with only 36% of UK adults viewing providers as honest and transparent in customer dealings. How can financial organizations rebuild trust and transparency with consumers?

Rebuilding trust requires a multifaceted approach. Financial organizations must not only comply with Consumer Duty but also engage in transparent communication, actively seek customer feedback, and consistently deliver on promises.

In the 21st century, brands must be socially responsible and customer-focused to earn trust. Establishing a customer-centric culture, training staff, and demonstrating a commitment to ethical behavior are essential steps. At Sends, we've developed a Value Mission Statement that showcases our dedication to transparency and customer trust.

7. How can financial specialists and professionals stay compliant with evolving Consumer Duty regulations?

We need to understand that long-term compliance means more than just monitoring internal process effectiveness or validating that product communications are clear. It requires a fundamental shift in organizational mindset and customer-centricity. Staff at all levels must be trained, empowered, and motivated to align offerings with customer outcomes. Boards also play a pivotal role in overseeing compliance and embedding the Duty into day-to-day operations.