Senior FSA executives have signalled support for the draft Financial Services Bill to include a principle laying out firms’ responsibilities to consumers.
Currently, the bill contains a clause requiring the Financial Conduct Authority to abide by “the general principle that consumers should take responsibility for their decisions”. There is nothing that lays out the responsibility of firms to consumers.
Last week, FCA chief executive designate Martin Wheatley told the committee scrutinising the bill that having a principle regarding firms’ responsibilities to consumers would be helpful.
But he warned that drafting the principle would be difficult because of the range of financial literacy among those defined as consumers in the bill. The term applies to all consumers, from retail investors to hedge fund managers.
Wheatley said: “If we could articulate that in a way that made sense within the bill, we would be happy if that was part of the process.
“The issue we face is that it is quite a hard thing to define in a legal sense, but to have it as a broad principle within the bill would be helpful to us and we would then have to interpret that within our rules and guidance.”
FSA conduct of business unit interim managing director Margaret Cole said that firms’ responsibilities to consumers are currently laid out in the treating customers fairly principles.
She said: “I do not have a fundamental objection to having something like this in the legislation but in the rules and principles we operate under it is there.”
Wheatley and Cole were responding to a question from and Liberal Democrat MP David Laws who said the responsibilities in the bill are “unbalanced”.
He said: “We seem to have this responsibility principle clearly in the bill saying consumers have got to watch out and take responsibility for what they are purchasing but it is unclear what the responsibility is for firms.”