The FCA Called And They're Not Happy
When you run a financial service providing business, the last thing you want is to receive a letter from the FCA, informing you that customers have complained about your company. Indeed, the financial sector can be particularly stressful at the best of times. It’s fair to say that an FCA notification is guaranteed to raise your stress levels unexpectedly and dramatically.
Why should the FCA investigate your company? There are typically three main reasons why such an unpleasant situation would arise. Indeed, the FCA serves multiple roles by protection your customers, promoting healthy competition between financial service providers on the same market, and keeping the financial sector stable. It’s fair to note that while the FCA protects customers in the UK, they have no jurisdiction about international customers and market. Therefore, the complaint they’ve received is focused on your UK-based offering only. In other words, whether you’re a financial advisor or you run a mutual society, you have to pay close attention to your business processes.
Your customers don’t know when prices change
The first and most common issue that your customers will notice is the risk of misleading information regarding your price premiums or price increase – which can be an unpleasant surprise for mutual customers, for instance. While you can consider increasing their costs, you should check with FCA compliance experts, such as the Scott Robert team, about how to best approach changes and keep your customers in the loop. Indeed, misleading information or missing information regarding fees is likely to give your customers an excellent reason NOT to come back. More importantly, they could raise the issue with the FCA, which can affect not only your profit but your reputation as a company.
Your prices are completely unfair
Price discrimination is a touchy subject that requires in-depth investigation. From the FCA’s perspective, discrimination on prices occurs when the pricing system is unjust towards certain groups of customers. The FCA is more likely to get involved in solving the issue if vulnerable customers are targeted. There’s a thin line between unfairness and abuse of vulnerability. While the FCA keeps an open-mind about the definition of a fair market based on pricing competitiveness, for instance, the organisation has made a priority to protect customers at risk. In other words, if you can’t justify charging some of your customers more than others, you might want to review your fees strategy.
You fail to protect data confidentiality
With the recent GDPR, firms have become more concerned about data breach scenarios. The financial sector is an especially attractive target for hackers who want to corrupt, use or sell confidential data. Data breaches reported to the FCA have risen by 480% in the span of one year. Unfortunately, financial companies that have made themselves more vulnerable through lack of IT security or failure to keep up with the current tech are more likely to be perceived as responsible for encouraging cyber crimes. Not only can it affect your current growth, but it can also damage your reputation for potential customers.
The bottom line is that you can’t afford to be sloppy when it comes to maintaining your financial activities. As a business, you want to follow the FCA’s principles carefully and work with experts to continue to raise the bar.
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