This week, new rules came into force governing the information current account providers need to publish.
The changes, announced on the FCA website, follow action from the financial regulator and the Competition and Markets Authority (CMA). They have been implemented as a result of the CMA’s in-depth investigation into the banking sector, the results of which were published in August 2016 and can be read here.The rules aim to make it easier for consumers and small businesses to understand and compare the services offered by current account providers.
What information must be published and how must firms display it?
Banks providing current accounts must now publish standard information on their website covering:
- How and when services and helplines are available
- Contact details for help, including for 24-hour helplines
- How often the firm has had to report major operational and security incidents
- The published level of complaints made against the firm
The information must be published online in a consistent format. Large banks also need to make the same information available electronically via online Application Programming Interfaces (APIs).
In addition to the information above, larger banks must also publish information on how likely people would be to recommend their bank – as well its online and mobile banking, branch and overdraft services – to friends, relatives or other businesses. This data comes from an independent survey covering thousands of personal and small business customers.
What is the aim of the changes?
This requirement is being introduced with the intention that it will drive up competition between banks, and lead to better overall service levels for consumers.
Announcing the launch of the new rules, the FCA said that ‘Publishing this information in this way will promote effective competition by incentivising firms to offer better services in ways that are transparent and noticeable’.
The regulator hopes that, as well as helping consumers, the new information will make it easier for comparison services and the media to compare and contrast different current accounts.
What happens next?
Current account providers are required to publish this information from this week. From November this year, they have undertaken also to publish – in a standardised format – information highlighting the support they offer customers who have one of the four main characteristics of potential vulnerability outlined in the FCA’s Approach to Consumers 2018.
These characteristics are defined by the FCA as:
- Resilience – low ability to withstand financial or emotional shocks
- Life events – major life events such as bereavement or relationship breakdown
- Capability – low knowledge of financial matters or low confidence in managing money
- Health – conditions or illnesses that affect ability to carry out day to day tasks
From 15 February 2019, providers will additionally be required to publish information quarterly on how long it takes them to open a current account, and how long it takes them to replace a debit card.
How does this fit with other FCA activity in the sector?
The new rules shouldn’t come as a huge surprise for anyone familiar with recent FCA priorities. Our recent blog on the regulator’s annual report and accounts said that the report covers a ‘familiar theme: the need to treat consumers fairly’.
The various strands of the Authority’s drive for fairness have some consistent components:
- The need for clarity: a focus of the regulator’s smarter consumer communications initiative, which aims particularly to ensure that communications are fair, clear and not misleading.
- A focus on consistency and more prescriptive rules around performance data. This can be illustrated by the recently-introduced PRIIPs regulation with its requirement for firms to produce Key Information Documents in a standardised format.
(If this is a challenge you’re facing, you can read our tips on avoiding potential pitfalls in preparing your KIDs and our advice on making them user-friendly.)
- A desire to protect the vulnerable – the FCA has been vocal in its work to protect potentially vulnerable consumers.
What do Compliance teams need to do next?
For Compliance, Marketing and Communications teams in retail banks, all of this means another communication requirement to comply with.
Familiarise yourself with the new rules and put in place processes to ensure you publish the required data.
Take time to identify whether you fall into the ‘larger bank’ category and will need to publish information via API and the supplementary data on how likely customers are to recommend you.
If you are responsible for current accounts, the new requirements are just another evolution in the regulatory landscape. To read more about the evolving challenges facing compliance professionals, you can download a copy of our whitepaper, The changing role of the compliance officer. It’s free and you can read it here.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.