There are many firms that are already delivering the right outcomes for consumers – good products and services at fair prices, supported by high standards of customer service and clear communications. We see many good practices by firms in retail sectors.
![car principal definition car principal definition](https://www.bankofamerica.com/content/images/ContextualSiteGraphics/Logos/en_US/How_Car_Loans_Work_600x315.jpg)
This aligns with our recently published guidance on the fair treatment of vulnerable consumers. In our CP, we highlight that firms should take additional care to ensure vulnerable consumers receive outcomes that are as good as for other consumers. For example, where consumers are using digital and online services, these can provide greater choice and convenience, but can also introduce complexity and risk.Īnd consumers who are in vulnerable circumstances are at greater risk of harm. These market conditions can be exploited by firms to consumers’ detriment, and the negative impact on consumers and their ability to make good decisions can be exacerbated by their circumstances. And firms may not always compete effectively to drive up quality and bring down costs in consumers’ favour. These include their weaker bargaining position, asymmetries of information, lack of understanding or behavioural biases (as explained in the Consultation Paper (CP)). Consumers’ ability to make good decisions can be impaired by various factors. We know that due to the way that financial services markets operate, consumers don’t always get the products and services that meet their needs or the outcomes they might reasonably expect. To enable this, firms need to ensure that their products and services are fit for purpose and offer fair value, and that their communications and customer service enable consumers to make and act on well-informed decisions. Bringing together our consumer protection and competition objectives, it would help create an environment where consumers are better equipped to achieve good outcomes from financial services. The Consumer Duty would add to the range of regulatory tools we use to meet our strategic objective of making markets work well. In essence, we want to see firms putting themselves in their customers’ shoes, asking themselves questions such as ‘would I be happy to be treated in the way my firm treats its customers?’, or ‘would I recommend my firm’s products and services to my friends and family?’. assess the effectiveness of their actions.act to enable rather than hinder these outcomes.
![car principal definition car principal definition](https://media.springernature.com/full/springer-static/image/art%3A10.1038%2Fs41408-021-00459-7/MediaObjects/41408_2021_459_Fig1_HTML.png)
ask themselves what outcomes consumers should be able to expect from their products and services.The Consumer Duty would require firms to:
![car principal definition car principal definition](https://www.investopedia.com/thmb/zR_0Ivxv7nuKPOvXqeFTUE99EkQ=/2063x1453/filters:fill(auto,1)/NowMayBeaGoodTimetoTradeInYourCar-2b64f10ea31b497fb0d82b8cc9e6fedc.jpg)
We use ‘customer’ when talking about an individual firm’s customers or potential customers. We use ‘consumer’ when talking about the wider group of those who use financial services.
![car principal definition car principal definition](https://www.eslprintables.com/previews/856475_2-car_companies_logos_and_classification.jpg)
In this Consultation Paper we use the terms ‘consumer’ and ‘customer’ to mean retail clients who are within the scope of these proposals, including those the firm does not deal with directly. We refer to the markets covered as ‘retail markets’. Our proposals extend to firms that are involved in the manufacture or supply of products and services to retail clients, even if they do not have a direct relationship with the end customer. So in most cases, where we regulate the provision of financial services to SMEs, these proposals would apply.
Car principal definition professional#
This is a wide term that includes all clients other than professional clients (such as large corporate entities and government bodies) and eligible counterparties. Our proposals relate to products and services sold to ‘retail clients’. These proposals apply to firms in relation to their regulated activities. For many firms, this would require a significant shift in culture and behaviour, where they consistently focus on consumer outcomes, and put customers in a position where they can act and make decisions in their interests. We are proposing to introduce a new ‘Consumer Duty’, that would set higher expectations for the standard of care that firms provide to consumers. We want to see a higher level of consumer protection in retail financial markets, where firms are competing vigorously in the interests of consumers.