The UK Financial Conduct Authority (FCA) has pledged to change its duty of care rules following feedback it received last year.
The watchdog has identified “deficiencies” in its current consumer protection regulation and is looking for alternative approaches.
According to the FCA, the possible options going forward 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; and
- New/revised principles to strengthen and clarify firms’ duties to consumers, including considering a potential private right of action for principles breaches.
In fact, last month International Adviser reported that the regulator was being investigated by a Parliamentary committee. This was caused by the collapse of a UK firm that sold “misleading” mini-bonds, despite it being regulated by the FCA.
Changes ahead
“There were a range of opinions about what would secure the right level of protection for consumers,” said Andrew Bailey, chief executive of the FCA.
“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 regulator also said that these changes are going to be a priority in its business plan for 2019/20, especially with the looming shadow of Brexit in the next few months.
The decision came after the feedback received by the watchdog highlighted high risks of harm consumers are facing despite the existing regulatory framework.
