FCA reveals 'duty of care' measures to protect consumers

Tuesday, 17 July 2018 12:20

The FCA has today revealed new measures it will take to protect consumers and sets out when and how the organisation will take action.

The regulator’s ‘Approach to Consumers’ document, published today, will sit alongside a new discussion paper on a ‘Duty of Care’.

Taken together the documents are intended to “ensure there are no gaps in protection for consumers in the financial sector.”

The FCA says the discussion paper will explore if there is a need for a specific duty of care requirement for firms in financial services.

It seeks to determine whether duty of care could “enhance good conduct and culture and provide additional protections for consumers.”

If changes are required the paper asks what those changes could look like and what the impact would be for consumers, firms and the FCA.

It also looks at what the possible alternative approaches to a new duty might be.

The Approach to Consumers sets out the FCA’s expectations, first published for consultation on 6 November 2017, on how consumers should be treated by financial firms and where the FCA will intervene if things are going wrong.

It also gives insight into the FCA’s wide-ranging powers.

The paper sets out the FCA vision of what well-functioning markets looks like, when and how the FCA will act to protect consumers, and its policy positions on key issues.

The FCA says its Approach to Consumers focuses on three key areas:

1. Protect consumers – "we secure an appropriate degree of protection for consumers"

2. Protect financial markets – "we protect and enhance the integrity of the UK financial system"

3. Promote competition – "we promote effective competition in the interests of consumers"

The FCA says in markets where consumers are well protected, it sees the following happening:

• Consumers are not exposed to deceptive or unfair practices by financial services firms.

• Consumers are provided with the appropriate level of protection against fraud and scams.

• When things go wrong, there are mechanisms in place to support redress.

• Where appropriate, consumers are prevented from taking out products that carry a high risk of harm.

Andrew Bailey, chief executive of the FCA, said: “Consumer protection is absolutely central to the FCA’s purpose and mission.

“Nearly everyone at some stage in their life will come into contact with a financial organisation and people need to know that they are being treated fairly and that the right protections are in place.

“Different groups of consumers have different financial needs, which will naturally change over their lifetime.

“As we have demonstrated in the past we will act to address harm or potential harm using the range of powers and tools at our disposal to protect consumers.”

He added: “To ensure we provide the necessary protections and deliver good outcomes for consumers we need to regularly review our approach, so we can reflect the diverse population of the UK and consumers’ changing needs in a rapidly-evolving and increasingly complex environment.

“The papers published today are part of this continuing work.”

• Editor's Note: 18.07.18 Further details from Approach to Consumers document added.