The UK Financial Conduct Authority (FCA) published a consultation paper on Tuesday that explores the idea of introducing a new duty of care requirement for financial firms. The paper aims to determine whether the regulator should be adopting new measures to ensure that firms are treating customers fairly.
According to the discussion paper, the consultation will consider whether a gap in existing regulation, whether reform is desirable, and if so, what form it could take, and what consequences reforms would have for consumers, firms and the FCA.
“Launching this discussion paper now will help us understand more fully what outcomes a new duty might be able to achieve and what a new duty for firms in financial services might do to enhance behaviour in the financial services market,” the FCA states in the discussion paper.
Comments on the paper are due by Nov. 2.
The FCA plans to consult early next year on additional guidance to help firms more clearly understand the regulator’s expectations and requirements for dealing with vulnerable people.
Alongside the duty of care consultation paper, the FCA also published a policy paper that outlines the measures it takes to protect consumers and, sets out when and how it takes action.
“As we have demonstrated in the past we will act to address harm or potential harm using the range of powers and tools at our disposal to protect consumers. To ensure we provide the necessary protections and deliver good outcomes for consumers we need to regularly review our approach, so we can reflect the diverse population of the UK and consumers’ changing needs in a rapidly-evolving and increasingly complex environment. The papers published today are part of this continuing work,” says Andrew Bailey, chief executive at the FCA, in a statement.
A similar debate continues to grip the Canadian investment industry.
Last month, the Canadian Securities Administrators (CSA) published a set of proposals that would incorporate “best interest” principles throughout its rules, including KYC, suitability, and conflict of interest rules. However, regulators abandoned the idea of a statutory best interest duty, which was under consideration.
“Consumer protection is absolutely central to the FCA’s purpose and mission,” adds Bailey. “Nearly everyone at some stage in their life will come into contact with a financial organization and people need to know that they are being treated fairly and that the right protections are in place.”