The financial services industry has undergone a significant transformation with the introduction of the Consumer Duty. This regulation, enforced by the Financial Conduct Authority (FCA), came into effect in July 2023 and places a paramount focus on protecting consumer interests and ensuring that firms deliver consistently excellent outcomes.
At the heart of the Consumer Duty are four core principles: acting in good faith, avoiding foreseeable harm, being open and transparent, and delivering fair value. These principles demand a fundamental shift in how financial firms operate, prioritising customer needs and well-being above all else.
In this article, we will delve into the key aspects of the Consumer Duty, exploring its impact on both consumers and financial firms. We will also discuss how XTB is actively working to comply with this landmark regulation, ensuring that our clients benefit from enhanced protection, transparency, and fair value.
What are the Core Principles of Consumer Duty?
At the heart of the Consumer Duty are four fundamental principles:
- Act in good faith: Financial firms must conduct business with honesty, fairness, and professionalism, always prioritising customer interests.
- Avoid causing foreseeable harm: Firms are obligated to take proactive steps to prevent and mitigate potential harm to their customers.
- Be open and transparent: Clear and understandable information must be provided to customers, empowering them to make informed decisions.
- Deliver fair value: Products and services should offer genuine value to customers, considering factors such as price, features, and benefits.
What’s the Impact on Consumers and Firms?
The Consumer Duty is expected to have a profound impact on both consumers and financial firms. Consumers can anticipate enhanced protection, clearer information, and fairer products. However, firms will need to adapt their business practices to meet the new standards. This includes:
- Improved customer outcomes: A greater emphasis on customer needs and satisfaction.
- Product redesign: Ensuring products and services are suitable for their target market and deliver genuine value.
- Enhanced transparency: Providing clear and concise information to customers.
- Fairer pricing: Offering products and services that represent fair value.
How does XTB comply?
Product Governance
XTB is committed to ensuring that the products we offer, such as Stocks, ETFs, CFDs and forex pairs, are suitable for our target market. We conduct rigorous product design and approval processes to maintain this commitment.
We prioritise clear and concise product information, with prominent risk warnings. Clients are informed that CFDs are complex instruments with a high risk of rapid loss due to leverage. We strongly encourage clients to fully understand CFDs and their associated risks before trading.
Price and Value
Our pricing is competitive and our fee structures transparent. Clients can find detailed fee information on our website under "Account and Fees." We offer 0% commission investing up to 100 000 EUR of equivalent monthly turnover for accounts in any currency. For investments above this limit there is only 0.2% commission (min. 10 GBP). Please note a currency conversion fee of 0.5% may apply. We also offer clients an interest rate of 5.2% per annum for GBP deposits. Interest for EUR and USD of 3.8% and 5% also gets offered per annum respectively. This means clients' uninvested funds can work harder while they wait for the perfect investment opportunity. This interest rate increase reflects our ongoing commitment to providing good outcomes, exceptional value and flexibility to our clients.
XTB provides accessible customer support channels, operating 24/5 through various methods including live chat, email, and phone. We are dedicated to handling customer complaints efficiently and fairly.
To empower our clients, we offer a comprehensive range of educational resources. From market analysis and educational articles to advanced trading tools, we cater to both novice and experienced traders. Our YouTube channel and platform provide over 30 hours of free educational content.
We recognise the importance of responsible trading and have implemented training for our staff on how to interact with vulnerable clients.
Financial Promotion
Our marketing materials are designed to be clear, fair, and not misleading. Prominent risk warnings are featured on our website and all marketing materials. We tailor our marketing efforts to suit the specific needs of our target market.
Customer Vulnerability
To identify and support vulnerable customers, we require all new clients to complete a vulnerability test before account activation. As an additional precaution, we offer a demo account for clients to practise trading risk-free. We also have monitoring systems in place to help highlight signs of potential vulnerabilities such as gambling so that we can be proactive in our mitigations to help support clients.
We have implemented measures to protect vulnerable customers and provide tailored documents and customer support to meet their specific needs.
In conclusion, the Consumer Duty marks a significant step forward in safeguarding consumer rights within the financial services industry. XTB is dedicated to adhering to these principles and ensuring that our clients receive the highest level of protection and service. By prioritising transparency, fair value, and responsible trading practices, we strive to create a positive and empowering experience for our customers.
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
