The Financial Ombudsman Service’s (FOS) final decisions on complaints about fees or charges or inappropriate product or service sales will play a crucial role in the consumer duty rules.

The Financial Conduct Authority (FCA) will monitor these decisions to assess whether firms provide fair value. It will also enable the regulator to measure the success of its proposals.

Respondents to the FCA’s consultation expressed their concerns around a risk of retrospection. They feared that FOS could apply new standards to past conduct.

Firms, professional and trade bodies, service providers, law firms, consumer organisations and individuals were to be found among the respondents.

The FCA states: “We were clear in CP21/36 that the duty would not have a retrospective effect and would not apply to past actions by firms.

“Actions taken before the duty comes into force would continue to be subject to the rules that applied at the time.

“We did however propose that the duty would apply, on a forward‐looking basis, to existing products and services, including closed book products and services.”

The FOS has been involved throughout the development of the consumer duty and the finalisation of rules and guidance.

A spokesperson for the FOS says: “The FOS welcomes the publication of the new consumer duty to raise standards, so that consumers are better protected and can make good financial decisions.

“We will continue to work closely with the FCA to ensure a consistent and complementary approach to the application of the new rules, whilst respecting the different statutory roles we deliver.”

The regulator added that both the FCA and FOS work on the basis that firms should be held accountable against the standards that prevailed at the time of the problem.

The FCA will also use financial lives survey to monitor what products and services consumers use.

The surveys will also enable the FCA to measure what consumers are seeing, feeling, and their levels of trust and confidence.

The regulator stated: “We will evaluate the success of our proposals by using data from a variety of sources including supervision and authorisation activities, firm management information (MI), and complaints data.

“As we implement the duty, we will develop further metrics by which we can assess its impact at the level of particular sectors and portfolios, and will ask stakeholders for views and suggestions on potential metrics.”

The FCA expects firms that have caused customers to take appropriate action to rectify the situation. This includes remedial action such as redress.

“Firms should pay redress promptly when it is due and considering relevant decisions of the FOS,” the regulator stated.

In some circumstances other forms of remedy, such as providing an apology, will be appropriate.

The FCA added: “We expect firms to take existing decisions and guidance from the ombudsman service into account and to apply the same approach were cases present similar facts.

“Where the ombudsman service has made a decision relevant to the case(s) at hand, we will consider a firm to be acting in bad faith if it delays paying redress where this is due but instead waits for the ombudsman service to make a further decision.

“We expect firms to promptly pay redress in these circumstances.”

The FCA has given firms 12 months from 31 July to implement the new rules from the consumer duty.

The regulator previously expected firms to have the new rules in place by April 2023 at the latest.