The FCA has published a Feedback Statement summarising the responses received to its Discussion Paper – ‘A duty of care and potential alternative approaches’ – published in July 2018, and setting out next steps.
As a result of the feedback the FCA received and its early analysis, it has identified options for change that are most likely to address potential deficiencies in consumer protection.
These are:
- reviewing how it applies the regulatory framework – in particular, its application of the Principles in its authorisations, supervisory and enforcement functions, and how transparently it communicates with firms about this
- new/revised Principles to strengthen and clarify firms’ duties to consumers, including considering a potential private right of action for Principles breaches
Andrew Bailey, Chief Executive of the FCA said:
‘I'm pleased that so many people shared their views with us as part of this process. Inevitably, there were a range of opinions about what would secure the right level of protection for consumers. Given their long-lasting impact, we now want to weigh-up possible changes, including whether reworking our Principles of Business is the right way forward. I will continue to push this forward as getting the right answer on this question is essential to the FCA delivering on its Mission.’
The Feedback Statement outlines the FCA’s initial proposals to review its Principles of Business and consider changes to its regulatory approach to increase protection for consumers. This will form an important part of the FCA’s Business Plan priority for 2019/20 to consider the future of regulation following the FCA’s Mission and as the UK leaves the EU.
The Discussion paper encouraged debate on whether the FCA’s regulatory framework delivers the necessary level of consumer protection and achieves the right balance between firm and consumer responsibilities and, if not, how this could be addressed - whether by imposing on financial services firms a formal Duty of Care or by other means. The majority of respondents, from across the range of the FCA’s stakeholders, consider that levels of harm to consumers are high and there is a need for change to protect them better.
The FCA will undertake further work to examine these options and will outline next steps in the autumn, seeking detailed views on specific options for change.