The Financial Conduct Authority (FCA) has this week published details of plans to further protect consumers as well as plans to enhance how financial companies look after consumers within a discussion paper. The ‘Approach to Consumers’ document runs in conjunction with the new ‘Duty of Care’ discussion paper.
The Approach to Consumers document
This sets out the FCA’s expectations on how consumers should be treated by financial firms and where the FCA will intervene if things are going wrong. It includes things like:
- Where consumers are active and able, it is easy for them to get relevant information and to switch to better products.
- Where consumers intend to be more active and able, they are supported to become so.
- Where consumers cannot be active and able, or face constraints in being so they are matched with products that better meet their needs wherever possible.
- Ensuring a range of products offered by a range of suppliers.
- Good quality products and services that meet consumer needs.
- Competitively priced products that are value for money.
- Fair treatment and fair risk pricing mean consumers are not unduly excluded.
- All consumers can access basic financial services.
- The needs of all consumers, including vulnerable consumers, are taken into account.
- Consumers are not exposed to deceptive or unfair practices by financial services firms.
- Consumers are provided with the appropriate level of protection against fraud and scams.
- When things go wrong, there are mechanisms in place to support redress.
- Where appropriate, consumers are prevented from taking out products that carry a high risk of harm
Read Full Paper: https://www.fca.org.uk/publication/corporate/approach-to-consumers.pdf
The Duty of Care discussion paper
This focuses on whether there is a need for a specific duty of care requirement for firms in financial services. It explores if a new duty of care could enhance good conduct and culture and provide additional protections for consumers.
‘Duty of care’ refers, broadly, to a legal obligation to take care which, when breached, will make the person at fault liable to compensate the victim for the loss they have suffered. A duty of care can arise in a range of circumstances, including:
- In a tort, such as negligence, where there is a duty to take reasonable care
- In contract, where such a duty may be express or implied (and may take the form of reasonable care or reasonable skill)
- The duty owed by a trustee to a beneficiary
- Not acting in good faith
- Not make a profit out of the consumer ‘trusting’ the financial firm to do the ‘right thing’ (other than with the consent of the client i.e. an agreed fee)
- Not avoiding conflicts of interest (either between its own interests and those of the client or between the interests of different clients)
Read the discussion paper: https://www.fca.org.uk/publication/discussion/dp-18-05.pdf
The Financial Conduct Authority also suggests it will also consult early next year on guidance for firms to help them understand more clearly their expectations and requirements for dealing with vulnerable people e.g. older people, younger people and those with physical or mental restrictions.