Tim Fassam, Director of Government Policy and Relations, commented: “The FCA has put significant stock in the Consumer Duty being fundamental to its regulatory and supervisory approach going forward. Whilst we do agree that it is right that the FCA looks to assert a standard of higher consumer protection, we are slightly disappointed that despite wide ranging calls for clarity on its proposals, the rules and accompanying guidance published remain somewhat theoretical and woolly.
“PIMFA retains concerns that the inherent subjectivity of the Consumer Duty will ultimately lead to confusion both for consumers and firms in terms of their expectations of a good outcome, and without clarity on what the FCA’s expectations of the Financial Ombudsman Service (FOS) are, and how, or if, they will be codified, we would be concerned that this could lead to a significant rise in cases brought against firms through no fault of their own.
“PIMFA are confident the vast majority of firms in our sector are already operating at, or above, the FCA’s expectations and to an extent, this confidence transmits to the broader financial services sector.
“Our concern, as we set out in our initial response, is that there are clearly firms operating within the market who either choosing not to follow the rules or struggling to meet their current obligations under them. Introducing new rules and regulations at significant cost to well-run firms will have little to no impact on the firms which are already not meeting their obligations.
“In order for these reforms to be worthwhile and impactful, the Consumer Duty needs to empower the FCA to finally drive the bad actors out of the market through effective supervision and enforcement. It is unclear to us whether or not this will actually be the case.”
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