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Govt rejects calls for banking ‘duty of care’ to customers

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The Government has rejected calls to impose a duty of care on banks when selling financial products to customers.

Labour MP Paul Flynn asked the Treasury what plans it has to bring forward proposals to give retail banks a duty to their customers when selling products.

The parliamentary commission on banking standards is set to publish its final report on 17 June when it will make recommendations on culture and standards in retail banking.

Chancellor George Osborne has pledged to make amendments to incorporate certain recommendations of the commission in the banking reform bill.

Last year, Labour tabled a series of amendments to the Financial Services bill in a bid to create a duty of care between financial services providers and their customers.

It would involve a significant strengthening of treating customers fairly principles as it would be a legally enforceable duty similar to a solicitor and client relationship.

Responding to Flynn, Treasury economic secretary Sajid Javid said: “The Government has no plans to bring in a duty of care for retail banks when offering financial products for sale.

“A duty of care would not give retail banks a clear view of the conduct that is expected of them or add anything to regulatory or other legal requirements that already apply relating to the sale of financial products.”

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  1. Strange that IFAs need to demonstrate and document their duty of care under TCF.
    Banks, on the other hand, seem to have no issue in selling inferior protection products to save a client a pound or two. “This policy does the same as the one you have and it’s cheaper”. Really? Especially coming from a tied agent who’s knowledge of the market is only as good as their provider tells them!

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