The news this week that the FCA has axed a requirement for the boards of regulated firms to have a dedicated Consumer Duty Champion - only introduced 18 months ago - was met with some raised eyebrows.

The watchdog made the move after FCA CEO Nikhil Rathi promised to cut back on over-burdensome regulation “at pace” - in line with the newish Labour administration’s ambitious promise to reduce red tape and promote financial services growth.

The requirement for a Consumer Duty Champion was never a key plank of the Consumer Duty but it was a visible sign of the importance that companies were asked to demonstrate to underline their commitment to the Consumer Duty.

The Consumer Duty regulations, introduced in July 2023, have been a core part the FCA’s retail regulatory strategy in recent times. They require firms to demonstrate that firms are looking after clients properly at all stages of the ‘customer journey.’

They have, however, not been without controversy and further change to make them less onerous is not unlikely.

One issue is the extra burden that companies have been faced with in terms of red tape and documenting their compliance with the new rules, which require far more communication with clients.

There have also been signs that the extra cost of Consumer Duty compliance has been the final nail in the coffin for affordable Financial Planning advice. There have been several surveys that have suggested that many advisers and planners have been forced to hand on ‘less profitable’ clients, those with lower assets, to other suppliers.

The net effect of the Consumer Duty seems to have been to push many advisers to review their client bank and get rid of their less profitable clients. Naturally advisers have decided that if the cost of looking after clients has risen substantially because of the new requirements then it makes sense to seek clients more able to afford their fees.

However well intentioned, the irony is that the Consumer Duty requirements have actually meant that fewer customers can afford professional and regulated financial advice. Not a great outcome in the scheme of things.

Pressure will now be on the FCA to scale back other aspects of the Consumer Duty and excessive regulation generally to spur competition and promote greater access to more affordable advice in one way or another.

The advice guidance boundary review, currently under way, will likely mean a mini-revolution in financial guidance to encourage more people to invest and use simpler and cheaper sources for guidance to avoid costly mistakes.

The FCA is now at a pivot point where it has to decide how far to deregulate a highly regulated financial services market and balance that with its substantial regulatory responsibilities.

It will not be easy.

• To be sent a link to view the latest issue of Financial Planning Today magazine (new issue out now) make sure you register for Financial Planning Today website if you are not already registered. 

Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days.  Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Follow @FPT_Kevin 

>Top Tip: Follow me on Twitter / X at @FPT_Kevin for breaking news and key updates