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FCA publishes feedback on Duty of Care

FCA published Feedback Statement on Duty of Care and Alternative Options

29th April 2019

The FCA has now published the feedback received in relation to its Discussion Paper on ‘A Duty of Care’, that was published last summer in relation to the UK’s exit from the EU (see our previous article entitled DP18/15 A Duty of Care: Brexit Discussions).

As a result of the feedback they have received, along with early analysis, the FCA has identified options for change that are most likely to address potential deficiencies in consumer protection.

Those identified being:

• reviewing how the FCA 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

The feedback statement now published outlines the regulator’s initial proposals to review its Principles of Business as well as consider changes to its regulatory approach to increase protection for consumers. This will then go on to form an important part of the FCA’s Business Plan priority for 2019/20 and to consider the future of regulation following the FCA’s Mission and as the UK leaves the European Union.

Debate was encouraged in the Discussion Paper 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 these shortcomings might be addressed, such as imposing a formal Duty of Care or other means on Financial Services Firms.

Many of the respondents from across a range of financial services firms considered that the levels of harm to consumers I high and that there is a need for change to help protect them better.

Chief Executive of the FCA, Andrew Bailey commented that “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.”

Next steps are expected to be outlined by the FCA in the Autumn.

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.