The FCA has set out plans for, and is consulting on, a new Consumer Duty on the part of authorised firms. The Duty will impact consumers, but will also include small businesses and SMEs.
The FCA intends that the new Duty will set clearer and higher expectations for firms’ standards of care towards customers, which in turn will lead to a higher level of consumer protection in retail financial markets. Some of the proposals, though, are already in place for insurance brokers by virtue of the IDD and certain ICOBS provisions, albeit there will still be plenty of work involved.
However, the FCA is seeking responses to the Consultation by the end of July this year, with plans to issue a second consultation by the end of the year and a Policy Statement with new Rules by the end of July 2022. Any implementation of a new Consumer Duty, therefore, is some time off.
This may be forming part of the FCA’s Transformation Programme, and could be an indication of a further evolution of how the Regulator goes about regulating with further emphasis on outcomes based regulation.
The Consultation sets out the three key elements that are seen as making up the new Consumer Duty:
The Consumer Principle
This may even replace the existing Principles 6 (Treating Customers Fairly) and 7 (Communications with Clients) and the proposed possible optional wordings involve delivering good outcomes for retail clients and acting in the best interests of retail clients.
The Cross-cutting Rules
These would requires firms to:
The Four Outcomes
For more detail the FCA are holding a Consumer Duty webinar on the Consumer Duty on 10th June , please follow the link to register.