Our Financial Services Regulatory colleagues have published a blog post on the FCA's Consultation Paper 21/36 (CP 21/36) which includes proposed new rules and guidance setting out a Consumer Duty which it considers will “fundamentally shift the mindset of firms” and establish an appropriate level of care to consumers. The consultation is open until 15 February 2022 and the FCA expects to confirm any final rules by the end of July 2022.
The proposals from the FCA will add to the range of regulatory tools to address the poor customer outcomes it has identified in retail markets. They would therefore give the FCA a greater ability to hold firms and senior management to account if poor outcomes are identified in the future, and they are intended to raise industry standards by putting the emphasis on firms to get products and services right in the first place. Although the new proposed Consumer Duty will create a further burden on firms, the Handbook rules and guidance and non-Handbook guidance should provide greater clarity on the FCA’s expectations of the outcomes that should be achieved.
From a disputes perspective, firms are likely to welcome the fact that there will be no private right of action for breaches of any part of the Consumer Duty at this time. Firms will still be accountable for any breach of the Consumer Duty through the Financial Ombudsman Service framework, which has had a recent increase in the value of award limits within its jurisdiction. However, the consultation paper notes that the possibility of a private right of action is being kept under review.
For a more detailed analysis, please see our FSR Notes blog post.
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