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Consumer panel calls for the industry to have duty of care

The Financial Services Consumer Panel wants to see a duty of care for customers imposed on the industry under the new regulatory framework.

Speaking at last week’s joint committee hearing, panel chairman Adam Phillips said a duty of care for customers would strengthen the regulator’s treating customers fairly initiative.

Phillips said: “Written into the Financial Services and Markets Act and carried across into this draft bill is the concept that consumers should take responsibility for their actions. Looking from the consumer perspective, there is an issue about whether the industry actually delivers a reasonable product to consumers in a way that they can effectively engage with.

“We would like to see written into this bill a duty of care for customers imposed on the industry as a principle. The FSA has tried to go as far as it can with TCF and said it found it very difficult to make it stick. We think a duty of care would introduce the expectation that the industry should treat their customers in a way which is fair and reasonable.”

But the Financial Services Practitioner Panel disagreed a duty of care was necessary. Chairman Russell Collins said: “We practitioners really want to retain this idea of consumer responsibility. We already have duties of care that are imposed on firms through the act. If this is extended in any way, that would require quite complex legal duties.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. Is there really any need for yet another layer of regulation in this area? If customers consider they’ve been mis-sold a product they have the right to make a formal complaint and firms are obliged to respond in a proscribed manner within a specified time frame. If the client isn’t satisfied with the response to their complaint, they have the right to to refer it to the FOS, whose determination is binding on both parties. Firms providing advice and/or selling products are required to hold appropriate PI insurance and the FSA even flouts the law by denying us all the protection of any longstop.

    Even if a client feels no compunction to raise a formal complaint, they’re free to transfer custody of their affairs to another firm.

    Just how far can or should regulation go in terms of imposing on firms a duty of customer care? What about the FSA’s responsibilities to enforce the customer care regulations already in place which, in numerous instances it’s failed to live up to? KeyData, ArchCru and Barclays/Aviva spring readily to mind. In the case of the latter, consumers who’d complained were so frustrated with Barclays’ lack of action and with the FSA’s lack of action to make Barclays treat its customers fairly that they actually organised a demonstration outside Parliament. Surely these examples point to a very pressing need not for yet more regulation of intermediaries but for a start to be made on a system of regulation of the regulator?

    This is the very foundation of what Andrew Tyrie and the TSC are trying to achieve. Yet, at every turn, they’re frustrated by the FSA’s manifest lack of accountability and the fact that the goverment appears to be quite content with the present state of affairs, having anounced that the FCA, like the FSA before it, will be accountable only to its own board. This, of course, means accountable to nobody.

    Yet all we hear are calls from the FSCP for more regulation of the industry and, from Adair Turner, for the hydra of Canary Wharf to be granted more power, more resources and, as always, more money. If, as is manifestly apparent, the FSA can’t do its job properly within the existing regulatory framework, is the answer really more, power, more resources and more money? Are its failings credibly attributable to not having enough of all those things already? Is it really likely to do any better with more, more, more of everything? Is it not extremely dangerous to grant an unaccountable body such as the FSA whatever it asks for? The whole regulatory machine is just completely out of control.

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