New rules for consumer protection across financial services to ensure people are treated fairly have come into force.
The new Consumer Duty is supposed to ensure people are served by financial products they can understand.
It aims to end hidden charges, and ensure providers of products such as savings accounts and mortgages inform people of any better deals available.
But commentators say some businesses are ill-prepared for the changes.
The reform is being overseen by the UK’s financial watchdog, the Financial Conduct Authority (FCA), which says it will raise the bar on help for vulnerable people and offer fair value to savers.
The shift comes after a complex rewriting of some of the FCA’s rules for the 60,000 financial firms it regulates, for which companies have had a year to prepare.
At their heart is a requirement that firms provide products that meet their customers’ needs, and ensure adequate support is provided as and when people need it.
That should be seen in shorter waits and suitable responses when customers call a company on the phone, and the end of rip-off fees.
Nisha Arora, from the FCA, said: “The duty raises the bar across all corners of finance and will ensure firms equip their customers with information they can understand, services they need and the right support when they need it.”
She said it should mean “the customer always comes first”, with regulators already having highlighted the impact it could have in ensuring savers are signalled towards products with better returns.
The FCA said it should also help people like Samantha, who was a victim of financial domestic abuse. Her ex-husband had opened two overdrafts worth £1,000 in her name.
“I was asked multiple times on different calls to give my bank card number, balance and details of recent transactions, but I had no access to these accounts. There was no understanding or empathy at all,” she said.
“I’m very lucky that I have a strong network of support around me. I can’t imagine how hard it is for people who don’t have any support because even with it I was pushed to my limits.”
The FCA said that there should be understanding and flexibility from staff in such circumstances, and products should be designed with such needs in mind. It said its research suggested 7.4 million people unsuccessfully attempted to contact one or more of their financial services providers over a 12-month period, with the most vulnerable in society most likely to struggle.
However, there have been questions raised about whether firms are suitably prepared for the changes.
Andrew Stevens, from services company Quadient, said that many banks were still failing to effectively communicate with customers. For example, its research suggested that only 8% of consumers could fully understand updated overdraft charges.
