The Financial Conduct Authority (FCA) has proposed introducing even stronger protections for consumers in financial markets in a new consultation on consumer duty rules.
The City regulator said that it has seen evidence of practices that cause consumer harm, including firms providing information which is misleadingly presented or difficult for consumers to understand.
As a result, the FCA has proposed a new consumer duty rule, which will ensure that consumers have access to products and services that are suitable for their needs.
The regulator is seeking consultation on the wording of this duty. At present, the draft wording says: “a firm must act in the best interest of retail clients” or “a firm must act to deliver good outcomes for retail clients.”
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The duty will also include cross-cutting rules which would require all financial services firms to take all reasonable steps to avoid foreseeable harm to customers, to enable customers to pursue their financial objectives and to act in good faith.
“The package of measures we are proposing will enhance our existing rules and is designed to tackle the harms we see in financial services markets, and their causes, as well as put consumers in a stronger position to make good decisions,” said Sheldon Mills, executive director of consumers and competition at the FCA.
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“We want firms to be putting themselves in the shoes of consumers and asking ‘would I be happy to be treated in the way I treat my customers?’. We want consumers to be able to advance their financial wellbeing and build positive futures for themselves and their families.”
The consultation period will end on 31 July 2021. The FCA expects to consult again on proposed rule changes by the end of 2021, and any new rules will be added by the end of July 2022.