Consumer Duty is a new set of rules introduced by the Financial Conduct Authority (FCA) to ensure that financial firms treat their customers fairly and provide them with good outcomes. It came into effect in July 2023 for all businesses dealing directly or indirectly with retail clients, including those providing motor finance.
In simpler terms, Consumer Duty means that companies must consider what is best for you as a customer when offering products like car loans or insurance. For example, if you're looking to buy a new car on credit, the finance company should give you clear information about your options and help you understand any risks involved before you sign up.
This matters because it helps ensure that firms are not just trying to make sales but genuinely want to support their customers by giving them the right advice. This can prevent issues like being sold a loan you can't afford or getting insurance with poor coverage.
The FCA’s Consumer Duty is based on the principle that financial companies must act in consumers' best interests and provide fair treatment throughout the customer journey. It aims to protect people from unfair practices and promote better outcomes for all retail customers, not just those seeking motor finance but everyone who uses financial services.
A practical tip: When considering a car loan or any other type of financing, ask your provider how they ensure their advice is in line with Consumer Duty principles. This can help you feel more confident that the product being offered is suitable and fair for your needs.
How This Relates to the FCA Redress Scheme
The FCA motor finance redress scheme covers 12.1 million agreements with an average compensation of £829 per agreement. The total cost to firms is £9.1 billion. If you had PCP or HP finance between 6 April 2007 and 1 November 2024, you may be eligible. The final deadline to complain is 31 August 2027. You do not need a claims management company.