City of London Minister Andrew Griffith has warned that the FCA’s new Consumer Duty could damage the sector and trigger a wave of spurious lawsuits, according to news reports.
The Financial Times reported that Mr Griffith was “scathing” about the duty at a recent dinner.
The paper said Mr Griffith is worried the Consumer Duty will impose new regulatory burdens on the financial services industry.
The Treasury declined to comment but said: “People should benefit from appropriate levels of consumer protection and it is right that the independent regulator maintains responsibility for delivering these standards.”
The FCA said the consumer duty would “encourage innovation while driving competition and growth in the financial services industry in the UK.”
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Lisa Laybourn, head of technical policy at investment and savings trade body TISA, said reports of the Minister’s comments should encourage further dialogue and that firms need “detailed guidance” on the Duty.
She said: “Many within already highly regulated industries such as the investment sector have justified questions about additional steps they need to take before the Duty is fully enforced.”
She said further governance checks and evidencing of existing compliance are vital, but firms must look beyond this.
Better communication with customers is one key example, she said. For communication to be effective in increasing consumer engagement, it needs to be delivered in a way that they will understand.
Ms Laybourn said: “Identifying other areas of improvement will take time. Firms need to review many aspects of their offering and then consider changes in their procedures.
“We understand this is a challenging ask to complete within the implementation timeframe.”
She said the Consumer Duty is a worthwhile initiative that will refocus providers on the needs of the consumer, and many firms have already made significant process in operationalising the Duty.
“But it requires detailed guidance and support from regulators in the implementation phase, as well as time and effort from providers.
“It is our hope that the City Minister’s reported comments spur further conversations between firms, Government and regulators on prioritising consumer-friendly measures as part of the Duty’s implementation process.”
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