Financial services firms will have to provide an “appropriate” level of care to consumers as part of a strengthened consumer protection remit for the Financial Conduct Authority.
The Financial Services Bill says FCA-regulated firms should have a role in protecting consumers. The draft bill only included a consumer protection remit for the FCA.
It says: “Those providing regulated financial services should be expected to provide consumers with a level of care that is appropriate, having regard to the degree of risk involved in relation to the investment or other transaction and the capabilities of the consumers in question.”
The draft Financial Services Bill said the regulator must have regard to the fact that consumers should take responsibility for their decisions and should take into account the risk of products and a consumer’s experience in its dealings with them.
In November, FCA chief executive designate Martin Wheatley called for the bill to include a principle laying out firms’ responsibilities to consumers.
But FSA conduct of business unit interim managing director Margaret Cole said firms’ responsibilities to consumers are currently laid out in the treating customers fairly principles.
Lansons public affairs and regulatory consulting director Richard Hobbs says: “Under the current regime, firms already have to exercise skill, care and due diligence, so this is already required.
“The word ’appropriate’ might be imprecise, but it indicates that any action the regulator might take to enforce the objective will be proportionate.”
Aurora Financial Planning chartered financial planner Aj Somal says: “Products are designed to confuse not only clients but also advisers, so consumer protection rules, along with the FCA’s product intervention powers, will help to reduce the chances of misselling.”