Shaping financial firms’ future duty towards customers

The financial industry regulator asked for views on new rules to protect consumers – here’s what Mental Health UK told them.


Recently, the Financial Conduct Authority (FCA) – who regulate financial companies such as banks and insurance providers – held a consultation on their proposals for a new Consumer Duty. This new duty aims to encourage firms to do more to ensure fairness for their customers.

Mental Health UK responded to the consultation as part of a new chapter of work around money. We’re pleased the FCA consulted on this, but we want to make sure that customers affected by mental illness are specifically protected under any new rules.

The FCA propose two options for the wording of the new duty: one wording is focused on financial firms acting in customers’ best interests, and the other wording is focused on financial firms ensuring good outcomes for their customers. They then go on to ask if their proposals amount to a duty of care.

We told them that whilst achieving good outcomes and acting in people’s best interest are presented in opposition to each other, their proposals do not amount to a duty of care, and they must ask firms to do both. We told the FCA that they should consult separately on a new legal duty of care.

We also expressed concerns about the FCA’s focus on “reasonableness” and “reasonable customers”. We felt that this language could be used by financial firms to dismiss issues raised by people living with mental illness, and so would enable firms to ignore their duties towards such customers.

The FCA has previously done some work to address the needs of “vulnerable” customers, including those affected by mental illness, and this is welcome. However, in this consultation document, the input of people with lived experience of mental illness was clearly lacking. Whilst the consultation recommends that companies “put themselves in their customers’ shoes”, we told the FCA that this does not go far enough; we said that the FCA and financial firms themselves must consult directly with customers with lived experience of mental illness and demonstrate that they have done so.

The consultation has now closed and the FCA will spend the next few months going through the responses and drawing up their next steps. It’s likely that they’ll be consulting on these proposals again in the future, so we’ll keep you updated with how this work progresses.


Read our response in full

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