Consumer Duty is in action as of today, as the Financial Conduct Authority (FCA) sets out new rules to bring about a higher standard of consumer protection in financial services.

The duty provides consumers with support, communications that are easily understandable for consumers, and products and services that meet their needs and offer fair value.

The FCA has said it is now closely monitoring how firms are applying the new rules and will take action against those that are not following them.

Chief executive officer at Standard Life, Andy Curran, said: “The advent of Consumer Duty marks a true step change and of all the financial regulations that have come into force over the years, few have had the same potential to transform how the industry engages with customers.

“It’s an opportunity for us to up our game and we’ve worked hard to do so from the hundreds of people that have ensured that our current suite of products are compliant with achieving good customer outcomes to thorough assessments to help us understand how we can raise the bar further to improve our service.

“Consumer Duty coincides with us investing heavily in our service proposition and products and the support we provide to the customers, clients and the adviser community. It forms an integral part of our focus on providing customers with choice and greater certainty of outcomes.”

The enforcement of Consumer Duty comes as the FCA launches an action plan to tackle cash savings rates in a bid to ensure that banks and building societies are passing on interest rate rises to savers appropriately.

Following a review of the market, the FCA found that while interest rates on cash savings have been rising, they have been rising more slowly on easy access accounts.

It was found that nine of the biggest savings providers, on average, only passed through 28% of the base rate rise to their easy access deposits between January 2022 to May 2023. Notice and fixed term deposits have seen greater pass through of rate rises at 51% over the same period.

Smaller firms on average offered higher rates than their largest competitors. The FCA has said that firm offering the lowest savings rates will be required to justify how these rates offer fair value under consumer duty.

Head of retirement analysis at Hargreaves Lansdown, Helen Morrissey, said: “Interest rates have soared over the last 18 months but for many of us our savings have not enjoyed anywhere near the same kind of boost. Banks have been slow to increase rates on cash savings - particularly those in easy access accounts and we’ve seen a gulf emerge in the market between smaller firms offering better rates than their larger, more established competitors.

“As we usher in the era of Consumer Duty these banks now have to justify why they are offering the rates they are or face FCA action. They will also need to do more to make sure they are communicating with customers and making them aware of how they could be getting more for their money elsewhere. At a time when many families are struggling this is a hugely welcome move.”

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