FCA publishes second Consumer Duty consultation

December 2021

The FCA has issued a further Consultation (CP21/36) in relation to the proposed new Consumer Duty, which includes a Feedback Statement to CP 21/13. As part of the consultation, it has also published lengthy and detailed draft guidance at Appendix 2 to help firms prepare before the introduction of the new Duty.  The FCA wishes to see a higher level of consumer protection in retail financial markets. It intends that the new Duty will set clearer and higher expectations for firms’ standards of care towards customers, which the FCA believes will, in turn, lead to that higher level of consumer protection.

The proposals for the new Consumer Duty will include:

These rules set out how firms should act to deliver good outcomes and therefore provide greater clarity on the expectations under the new Principle. They also help firms interpret the 4 outcomes.

The paper includes commentary in relation to the impact of the new Duty on existing FCA guidance in relation to vulnerability, confirmation that, at this stage, that there will be no private right of action (PROA) for breaches of the Consumer Duty, as initially discussed in the first Consultation, and monitoring consumer outcomes.

Appendix 2 of the Consultation contains lengthy (70 pages) draft non-Handbook guidance which contains useful examples of good and bad practice, behaviour that could lead to outcomes which would be likely or unlikely to satisfy the Consumer Duty.

The consultation is open until 15 February 2022 and the FCA expects to confirm any final rules by the end of July 2022.

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