Regulation is about treating consumers fairly - Vicky Crichton

A focus on protecting consumers from harm and detriment is a cornerstone of regulation in any sector. Now more proactive moves to promote consumer interests and support consumers to achieve their objectives are under way, recognising that markets thrive when consumers can access the services they need.

At the end of July, the UK Financial Conduct Authority (FCA) brought its Consumer Duty into force. The new regulation applies to all financial services products and requires financial firms to act in good faith, avoid foreseeable harm, and enable and support their customers to achieve their financial objectives.

The duty has been described as one of the most significant changes to financial services regulation in decades. It hasn’t been without controversy, with firms concerned about what they need to put in place to meet it and how they might be held to account for it, particularly in relation to complaints.

As a regulatory tool, it leads firms to consider what a good outcome looks like for consumers and to take decisions in good faith. That doesn’t mean getting it right every time, but it does mean firms being able to evidence how they have been thinking about, engaging with and treating their customers.

Vicky Crichton is Director of Public Policy, Scottish Legal Complaints Commission

Firms will need to ensure their services and products provide fair value, that their customer communications are understandable and that customers can expect support that meets their needs. The duty will also be considered when looking at complaints. Looking across from the legal services sector, those issues are all familiar components of many of the complaints we see.

As parliamentary scrutiny of the Regulation of Legal Services (Scotland) Bill begins, the discussion about what regulation can achieve for consumers – and what it can’t – is likely to continue.

Like financial services, legal services are often a difficult but vital purchase, and there may be far-reaching implications if we choose incorrectly or are poorly advised. Few of us understand the intricacies of the service or product we’re buying – that’s why we’ll often need a qualified, regulated professional to advise us. The pricing can be opaque or difficult to predict and we’re unlikely to be able to easily judge the quality of our eventual purchase.

It’s unlikely to be a relaxed shopping experience with so much riding on the decisions we make about what we need and who can best provide it.

For financial and legal services alike, regulation is there to ensure that consumers are treated fairly. That should also be a positive for firms though – helping them to attract, retain and support their customers right when their customers need them most.

Whether it’s a pension, a loan, a power of attorney or dealing with a loved one’s estate, we all want to feel we’re choosing a provider who has really understood our circumstances and can help us achieve the outcome we’re looking for. When we do, the chances are we’ll tell others – and word of mouth really is the best advertising money can’t buy.

If we see regulation as an opportunity to engage with consumers, to understand their needs and to see how we can meet them, then it will have succeeded in its purpose. Not just in protecting consumers from harm, but in positively supporting them to access the right service to help them solve their problems and achieve their aims.

​Vicky Crichton is Director of Public Policy, Scottish Legal Complaints Commission