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Categories:Politics,Regulation

CII calls for FCA to consider professionalism

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The Chartered Insurance Institute is calling for the Financial Conduct Authority’s consumer protection objective to include a requirement for firms to demonstrate professionalism.

In a briefing note sent to MPs ahead of this afternoon’s debate on the Financial Services Bill, seen by Money Marketing, the CII calls for an amendment to the current objective so that the regulator must take account of firms’ level of professionalism when making judgments.

The current objective says firms providing regulated financial services should be expected to provide a “level of care that is appropriate”, while taking into account the risk involved in the investment or transaction, as well as the capabilities of the consumer.

The CII wants the bill to require firms to provide a “level of care and professionalism that is appropriate”.

The CII says: “In our view, supervisors must take account of levels of professionalism when making judgements about firms. Research has shown that a firm’s relative level of professionalism - by which we mean a commitment to qualifications, continued learning and ethical conduct - can help determine customer outcomes and underpin honest and fair behaviour.”

In December, the joint committee on the draft financial services bill called for a requirement for firms to take some responsibility for consumer protection.

The committee’s final report says: “To complement the principle of ‘caveat emptor’, enshrined in the draft bill, a statutory duty should be placed on firms to treat their customers ’honestly, fairly and professionally’, and the FCA should ensure that companies address conflicts of interest and provide intelligible information, rather than accurate but impenetrable information that leaves customers confused.”

The CII’s paper says: “Unfortunately the Government did not take on board the joint committee’s recommendation in its entirety. Instead firms will be ’expected’ to provide an ’appropriate level of care’ as well as advice and information that is ’timely, accurate and fit for purpose’.

“These expectations are of course perfectly reasonable, however they are focused on outcomes of an advice process and not the behavioural forces driving the decisions made by firms and their practitioners beforehand.”

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Readers' comments (14)

  • Since inception of a restriction by FSA to stop the attachment of a valuable option to my client’s contracts and having taken the time to study and pass relevant examination cover the principle. Added to latter the FSA policy relating to TCF, I raised the subject with my examining body. Edited copy of reply received from my examiners below?


    “Thanks for your enquiry, and I can confirm that we are not directly involved in decisions taken by the FSA with regard to regulation of mortgages and investments.

    I do of course see your point about convertible term being a useful option for the public and that restriction of options can work to the detriment of customers.”

    In line with TCF I asked for permission to forward the above to the FSA.GOV.UK which I have not done to date, I leave the rest to your imagination and the rebranding of the FSA to FCA.

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  • CII looking to make more money when the RDR bonanza is over ? I hope they will be giving back their bonuses too !

    Yet another pointless exercise. What happened to TCF ?

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  • Awful lot of hot air with very obvious vested interests. Sadly the CII are total lightweights in comparison to proper professional bodies, a point they would do well to address. Shame they can't turn their energies to doing something useful.

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  • Yet again the CII show they are only interested in their business. Time and time again they come up with items that only serve to increase their income. Nothing is ever done to serve the adviser profession itself.

    Just waiting on that old nutshell we are a not for profit organisation blah blah. Where does all that extra money go higher salaries bonuses and higher operating costs. They act like a cut throat business in terms of generating income only. If they were serving the adviser community they would slash costs and reduce costs of exam entry and materials.

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