Context
Although related specifically to international payment pricing, the good and poor practice report published today outlines some useful views from the FCA in relation to pricing transparency under the Consumer Duty. A clear focus of the report is that the Duty requires firms to act to deliver good outcomes by ensuring that their communications meet the information needs of retail customers, are likely to be understood by retail customers, and equip retail customers to make decisions that are effective, timely and properly informed. Most of the findings can reasonably translate into any circumstance when ‘total cost and its component parts’ clarity is required and / or appropriate.
Key points to note and next actions
The report’s headline findings included observations about:
- Fees not always being clearly displayed.
- Additional fees, such as those charged by other intermediaries in a chain, often not being displayed ‘up front’.
- A lack of clarity where fees could vary.
- Relevant information for consumers not always being easy to find.
Good practice which was identified centred around clearly displaying information to consumers before they commit to a transaction:
- Where a ‘mark-up’ (which could be interpreted to include commission) was included in the cost, this was clearly explained to the customer.
- Variable and fixed fees are explained.
- The total cost to the customer is clear.
The poor practice which was identified included:
- Firms not providing clear and full costs prior to the consumer committing to a transaction.
- Firms not clearly communicating that the cost contains a ‘mark-up’.
- Unclear communication that the ‘mark-up’ is a cost paid by the consumer and retained by the firm.
- Highlighting the absence of a fixed fee as a ‘zero cost transaction’ despite charging a ‘mark-up’.
- Firms not providing clear disclosure on the overall cost of the transaction.
- Firms not proactively informing consumers that intermediary fees may affect the final total cost, leaving the consumer to discover this after the fees have been incurred.