FCA’s ‘A new Consumer Duty - Feedback to CP21/13 and further consultation’ - Which? response

Summary

• Which? welcomes the FCA proposals for a Consumer Duty which offers the prospect of delivering a step-change in the way consumers are treated by financial services firms.
• The critical factor in determining whether the FCA proposals make a tangible difference to consumers and deal with industry poor practice will be how they are implemented, supervised and - where necessary - enforced.
• The FCA must set out more clearly how it will determine the success of its Consumer Duty proposals, and commit to a full assessment of the impact of the Duty within two years of its implementation.
• We are disappointed that the FCA has decided not to proceed with a Private Right of Action (PRoA) at this stage. It must be revisited when a full assessment of the impact of the Duty is undertaken, and should be introduced if industry fails to respond positively to the higher standard.
• We strongly support proposals to make senior management accountable for meeting the Consumer Duty, including annual sign-off of the firm’s actions. However the FCA should strengthen its proposals and require greater transparency from firms.
• It is not clear how the FCA’s proposed approach to data collection will enable it to pursue a data-led approach to proactively identify poor practices.
• Publication of draft Handbook rules and guidance and non-Handbook guidance help to provide greater clarity on FCA expectations. However, ultimately the onus must be on firms themselves to develop policies and processes which meet the Consumer Duty.
• Ahead of the implementation of the Consumer Duty, the FCA should institute an extensive communications programme to disseminate information to firms and consumers, making clear the step-change in expectations that the Duty will bring about.