Big changes to financial services in 2013How legal changes will affect consumers

27 December 2012

Consumers can expect to see a vast increase in their rights in 2013, thanks to a range of new regulation and legislation.

We present a run down of the five most important changes to your rights in 2012, and those that will come into effect in the coming year.

Unfair card charges to be culled

Issue: Which? lodged a Super Complaint on card surcharges with the Office of Fair Trading in December 2011. Typical problems included card charges levied on people buying tickets from low-cost airlines that imposed fees on a per person, per flight basis.

Result: In 2013, any fee imposed on consumers who pay on plastic will be limited to the real cost of processing the transaction, 10p to 20p rather than pounds on debit cards, while credit card costs will only equate to a reasonable cost of the overall fee. A big win for UK consumers.   

End to insurance gender discrimination

Issue: EU rules on gender discrimination came into force on Friday 21 December, making it unlawful for insurers to base premiums on the gender of customers. 

The introduction of gender-neutral premiums for products such as car insurance are expected to increase premiums  for women, who have previously enjoyed cheaper car insurance. Conversely, annuity prices are set to increase for women and decrease slightly. You can find out more in our story on the changes that have been introduced. 

Result: The rules will remove an unfair and previously unavoidable barrier to fair pricing for all consumers.

Independent financial advice

Issue: The Retail Distribution Review (RDR) will result in the implementation of measures designed to ensure that consumers have access to good quality independent financial advice. Under the changes, financial advisers will no longer be able to receive commission payments from product providers to recommend products, will have to be better qualified and be more transparent about how they charge for their services. 

Result: Consumers will have a clear idea of how much they pay for advice, either through an upfront fee or an ongoing charge. Bias from product providers will be removed with the death of commission and better qualified advisers should deliver better outcomes for customers. We may see the charges for financial product, such as investment funds, start to reduce over the long-term. 

Pensions for all employees

Issue: Pension auto-enrolment was introduced earlier this year, and is being rolled out between now and 2015. It means that employees will be automatically enrolled in a work-base pension scheme either through their employer or a new provider, such as the National Employment Savings Trust. This will mean each employee can set up a nest-egg for their retirement.

Result: The plan is government-backed, with both employers and workers contributing to the pot, so when you retire, you can use your pension fund to buy an annuity to pay retirement income on an ongoing basis.

Packaged accounts

Issue: Packaged accounts have got a lot of flack from Which? for being a pricy way to buy financial products. Yet, changes are afoot to improve transparency of their benefits. From 31 March next year customers must be given an annual statement, which will detail whether they are still eligible for the insurance they are paying for on these accounts.

Result: The rules, brought in by the FSA last week, will make it easier for consumers to see what they are getting for their money.

And finally… A new financial watchdog

In Spring 2013, a new City regulator will come into power. The Financial Conduct Authority, which will replace the outgoing Financial Services Authority, will scrutinise the activities of the banks and other providers that have routinely let consumers down. It will take on extra powers, including (as of April) those of the Office of Fair Trading.

The FCA will have greater rights to penalise companies that transgress the rules and regulations governing how financial practitioners and companies can operate.

More on this...

  • Which? campaigns - more on our work to improve the financial sector
  • Your rights - Which? advice on how to recognise and protect your rights
  • Surcharges - further information on our Super Complaint success