FOS: What the FCA’s Consumer Duty means for resolving complaints.

As we inch closer to the 31 July implementation deadline, all eyes are on how the regulators and the Financial Ombudsman Service (the “FOS”) will interpret the Consumer Duty going forward – particularly the more subjective elements of the new rules.

Abby Thomas, the Chief Executive and Chief Ombudsman of the FOS, delivered a speech on June 20, 2023, assuring the financial services industry and consumers of the FOS' readiness to handle financial complaints arising from the Consumer Duty, while also sharing key observations on how the Duty could influence complaints.

Here are some highlights from the speech.

• The FOS reminded the industry that they are no strangers to ensuring consumer protection amidst ever-changing UK regulations. Following the introduction of the Consumer Duty, the FOS will continue to resolve complaints based on what they deem fair and reasonable, considering the circumstances of each case.
• The FOS has been working closely with the FCA on its expectations (both as it was formulating its proposals and during the current implementation period) as it works to ensure that both bodies are aligned.
• The FOS does not anticipate that the Consumer Duty will significantly alter their approach to handing complaints or have a significant impact on complaints volumes. The FOS is only expecting complaints related to the Consumer Duty to pick up later in the year.
• Currently, the FOS receives complaints mainly on the sale of products and services. However, after the implementation of the Duty, they predict an increase in complaints related to the use of products and services (e.g. firms not adequately checking if consumers are using products and services as intended).
• The FOS foresees more complaints surrounding the price and value of products, particularly when consumers feel that a product or service doesn't offer good value. The FOS will be looking at the price and value assessments of financial businesses in order to demonstrate fair value.
• The FOS is creating sector-specific “directorates” covering areas such as investments, insurance or banking. These “directorates” will expedite the process of obtaining industry-specific insights into Consumer Duty-related complaints and help the industry receive prompt, tailored responses and guidance.
• The FOS pointed out that the Consumer Duty will not protect consumers from all harm. Unforeseeable circumstances may still harm consumers, and many products inherently contain risks that consumers can reasonably understand and accept if firms follow the requirements.
• The FOS will provide more detail on its approach after the Consumer Duty’s introduction and it’s hoping to provide examples, workshops and case studies that will help firms respond to the complaints they see.

For further insight into the FCA’s Consumer Duty please visit our dedicated resource page.