The Financial Conduct Authority (FCA) is currently establishing plans for a new Consumer Duty to bolster their existing rules and principles in order to enhance consumer protection in retail financial markets. In the FCA’s 2020 Financial Lives survey, 1 in 4 respondents said they “lack confidence in the financial services industry and only 35% of respondents agreed that firms are honest and transparent in their dealings with them.” The Consumer Duty will be a requirement for firms to adhere to and is subject to regulatory enforcement for non-compliance. Its three key elements include:
- “The Consumer Principle, which will reflect the overall standards of behaviour the FCA expects from firms. The wording being consulted on is: 'a firm must act in the best interests of retail clients' or 'a firm must act to deliver good outcomes for retail clients'.
- Cross-cutting rules which would require 3 key behaviours from firms, which include taking all reasonable steps to avoid foreseeable harm to customers, taking all reasonable steps to enable customers to pursue their financial objectives and to act in good faith.
- It will also be underpinned by a suite of rules and guidance that set more detailed expectations for firm conduct in relation to 4 specific outcomes – communications, products and services, customer service and price and value.”
More information on the FCA’s Consumer Duty is available here.