If you are a business that is currently involved in the process of offering savings products to consumers, you may want to read the rest of this article…
Earlier this month, the Financial Conduct Authority (FCA) and the Information Commissioner’s Office (ICO) published a joint letter to UK Finance and the Building Societies Association that sought to clarify communications about savings products.
What is the issue?
The FCA and the ICO are concerned that the majority of firms are not communicating savings products that offer better value or have better interest rates to their customers.
On the flip side, these firms have queried whether current data protection regulations prevent them from informing their customers about better deals, especially if customers have opted out of receiving direct marketing.
The proposed solution & practical example
The FCA and the ICO have confirmed that whilst data protection law does allow customers to object to direct marketing, this does not prohibit firms from providing communications to customers when requested or required by a statutory regulator – provided these communications provide neutral, factual information about the interest rate and terms of the savings product they hold, the interest rate and terms of other available savings products, and what their options are for moving to another product.
New rules come in force today (31 July 2023) for new and existing products or services that are open to sale or renewal under the FCA’s Consumer Duty. This provides an example of where a regulatory communication may be required, as under this Consumer Duty, firms are required to communicate in a manner that aids their customers to make effective, timely and informed decisions. The Consumer Duty also requires firms to communicate at suitable points throughout the duration of the specific product offered to the customer.
A practical example of how the regulators want this to work in practice:
- Customer is using a product with a low interest rate.
- The firm knows the customer could benefit from a product with a higher interest rate (that may better serve the customer’s financial objectives).
- Even if this customer has opted out of direct marketing, the firm needs to ensure that the customer is made aware of the potentially better product.
- The firm should be able to provide the customer with the relevant information in relation to the “better” product without being at risk of breaching applicable data protection rules.
What this means for firms
Firms providing savings products need to balance their regulatory requirements when communicating with customers and will need to consider whether their communications around these products are “neutral and factual” or go a step further and include an element of “direct marketing” – if the latter, firms will still need to confirm whether the recipient has exercised its right to opt out before *hitting send*.
If you have any further questions about this, or you need support with your communications to customers to ensure compliance with the above, do get in touch with our team of experts who would be happy to assist.