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.”