Aviva says FCA duty of care proposal is “unnecessary”

Aviva says a proposal for the Financial Conduct Authority to ensure financial firms provide an “appropriate” level of care to consumers is unnecessary because rules are already in place which ensure they do.

The financial services bill says the FCA’s consumer protection objective should require firms “to provide consumers with a level of care that is appropriate” taking into account their risk appetite, the product risk and the consumers financial capabilities.

In a document submitted to the public bill committee, which is currently looking at the bill, Aviva says Treating Customers Fairly principles and new powers the FCA will have make the objective “unnecessary”.

It says: “Firms are required to follow FSA rules and guidance, high level principles on Treating Customers Fairly and will be subject to a more intensive product intervention regime. It therefore seems unnecessary for firms to also be expected to provide consumers with a level of care that is appropriate. This principle needs to be scrutinised and clarified.”

The note says the regulator should focus more on delivering positive consumer outcomes rather than avoiding negative ones. It says the regulator’s consumer protection objective should instead include a regard to “the potential benefits of consumers accessing suitable financial products that meet their needs.”

The call could find support from Labour members of the public bill committee currently considering amendments to the bill. Last week, Labour proposed amending the FCA’s competition objective so it considers “the ease with which consumers can identify and obtain services which are appropriate to their needs and represent good value for money”.

The firm also calls for:

  • The removal of proposals to stop the Upper Tribunal being able to substitute its opinion for that of the regulator.
  • Accountability at the Bank of England to be beefed up before it is given wide ranging new powers.
  • The FCA and the Prudential Regulation Authority to be required to identify where they can share services and information to minimise burdens on firms.
  • The PRA to have to carry out more in depth consultations on new rules and for how it should consult to be set down in law rather than left to the regulator.
  • For the FCA to clearly set out the circumstances under which it will use its power to ban products for a year.

The public bill committee is scrutinising amendments to the bill made by the 20 committee members. It will finish its work on March 22 when other MPs will be able to propose amendments.