Firms hoping the government’s call to boost growth through regulatory reform will mean cuts to the Consumer Duty will be “disappointed”, MorganAsh has warned.
On the 17 January, the Financial Conduct Authority (FCA) said it would remove “unnecessary regulations” and relax some of the rules firms must adhere to in response to the UK government’s calls to remove barriers to economic growth.
The FCA made the pledge to the prime minister, which sets out regulatory reforms to boost the economy.
In the letter, FCA chief executive Nikhil Rathi said the regulator will work with the government in a “fundamentally different way” to support the growth mission.
MorganAsh managing director Andrew Gething said this does not translate to cuts to Consumer Duty regulation.
Gething referenced the reply from the FCA to the government’s letter where it mentioned “minimal change” to the Duty.
However, the FCA has said it will remove the need for Consumer Duty board champions.
Additionally, in its reply to the government, the regulator said that growth will be a “cornerstone” of its strategy through to 2030.
Previously, the regulator has said that the Consumer Duty is a fundamental part of its regulatory framework moving forward.
Gething said: “As with other regulated firms we view it as essential that regulation is proportionate, but those hoping this letter will lead to the wholesale rollback of the Consumer Duty and its rules are likely to be disappointed.
“The FCA already has a remit for growth; indeed, the entire aim of the Duty is to improve customer confidence in the financial-services sector and to help drive sustainable growth.
“The FCA has cited many projects that all have a growth component and the Duty is certainly one of them.”
He pointed out that the only real change mentioned in its letter is the removal of board champions.
“This is a minimal change with the need for the board to attest to complying with the Duty still firmly in place,” he added.
“In truth, many firms had not yet implemented this anyway. The second will see the Consumer Duty used as the measuring stick to determine whether any new rules to protect consumers are necessary.
“Calls to cut the Duty is perhaps wishful thinking, especially among those firms that are yet to embrace the Consumer Duty or demonstrate the change the regulator wants to see.
“This is particularly true when it comes to the requirements to provide good outcomes for vulnerable customers, with many firms still reporting few or zero vulnerable customers, which just isn’t plausible.”
MorganAsh is a specialist in the Consumer Duty and customer vulnerability.
The FCA will change/modify/streamline/reduce as little as it can possibly get away with. It’ll tell the Treasury that it’s implemented all sorts of progressive, helpful and load-lightening changes but, in reality, it’ll have done no such thing. It’ll be just more lies.