One year of the Consumer duty - what impact has it had?

This week marks the one year anniversary of something very important to members of the Money and Mental Health team. You’re probably imagining something glamorous, but it’s actually to mark the introduction of a new set of rules for financial service providers. Yes, we are a very cool group of people! But this is quite groundbreaking, if a little dry. 

The new rules – the Consumer Duty – from the Financial Conduct Authority (FCA), who regulates financial services, requires firms to deliver good outcomes for consumers. We know that those of us with mental health problems can face challenges when navigating financial services and interacting with providers. So we felt the Consumer Duty could bring about positive changes. With the anniversary approaching we asked our Research Community, a group of 5,000 people with lived experience of mental health problems, if they’d noticed a difference. We’ve published the findings of that survey here, but what did we find?

When we asked Research Community members about how satisfied they were with their providers currently, for all but one product (loans), a majority said they were satisfied. One of the key areas of the Consumer Duty is that communications should support customers to understand their product and make informed decisions. 

We found that communications for several products were felt to be understandable by a majority of respondents, for example for current and savings accounts. Respondents talked about how communications were written in plain English, were well laid out and were informative. Financial products and services can be complicated and symptoms of mental health problems can make it harder to understand information. So it is welcome to hear such positive experiences. 

In our past research, we’ve found that financial products and services have often not been designed to meet the needs of people with mental health problems. Additionally, it can be very difficult to disclose a mental health problem in order to get support with accessing a product or service. One of the drivers of this is being worried how that disclosure will be received. Subsequently many people don’t disclose. 

In our Research Community survey, many respondents felt their products met their needs to some extent. For example, respondents talked about being able to organise or manage their spending in their account. There were also several examples of Research Community members disclosing their mental health problem and being met with considerate staff who provided appropriate support.

Unfortunately, there were still examples from Research Community members of communications that were difficult to understand or of finding it hard to get in touch. We know that the phone can be a channel that many people with mental health problems find very difficult to use, but it is often the main way to get in touch in key scenarios like being in debt. 

We also heard from Research Community members who disclosed their needs but staff did not respond appropriately. These situations can negatively affect people’s mental health but also make it harder for them to achieve their financial outcomes. This is a key aim of the Consumer Duty. However, many Research Community members expressed confusion about what was best for their financial situation and they felt they weren’t being aided by their provider.

One area where there was a lot of negative feedback from Research Community members was whether the price they paid for a product matched the benefits they received. This is known as ‘fair value’ by the FCA. In particular, respondents were frustrated by the price increases they had seen over the last year. This was a driving factor in why significant minorities of respondents felt their provider had got worse over the last year or were less satisfied with their provider.

The survey suggests that while there is good practice in financial services, there is still more to be done. Initial reviews from the FCA indicate something similar. In our policy note, we set out some key actions firms need to take to best support their customers with mental health problems, such as: building supportive disclosure environments; offering a range of channels to get in touch; and working with people with lived experience when designing products and communications. 

Given that it’s been a year since the rules came into force, and firms already had time to prepare before then, firms should be ready and able to show that they are complying. Ultimately the Consumer Duty can only be successful if the FCA takes action against firms that are consistently not doing what is required of them.