The Financial Conduct Authority has launched a ‘call for input’ on its own rules, with the aim of simplifying the current raft of regulations, reducing costs and paperwork for firms, and helping support economic growth.
This review follows the introduction of the Consumer Duty rules, which set out the standards providers must follow to deliver good outcomes for their customers.
The Consumer Duty rules were introduced last year, but only applied to new customers. The second phase of this — which comes into force tomorrow — stipulates that these standards must be applied to both new and existing customers.
Publishing this review the FCA said that there were concerns, particularly among smaller companies, about the “length and complexity” of the FCA’s current rulebook. As a result it is looking to see whether it can simplify requirements elsewhere, while ensuring consumer protection is met through greater reliance on higher level Consumer Duty rules.
This will include removing duplication or clarifying confusion between different sets of regulations, as well as identifying areas which might be overly-prescriptive, adding cost and complexity with limited consumer benefit.
The FCA said it wants to hear from providers, advisers industry bodies and consumer groups, with responses due back by 31 October 2024.
AJ Bell director of public policy Tom Selby says: “A year on from the implementation of new Consumer Duty rules the FCA is examining its own rulebook, with the aim of stripping out any rules or guidance which create regulatory cost for no clear consumer benefit.
“This period of regulatory self-reflection is welcome, and provides an opportunity to ensure the rules and regulations imposed on firms across various financial services sectors are fit for purpose.
“The development of reforms to the advice guidance boundary, including the potential for more personalised guidance through ‘Targeted Support’, will require firms to be given flexibility to design guidance interventions based on their understanding of customer behaviour.
“The demands of the Consumer Duty on firms to aim for ‘good outcomes’ for customers should reduce the need for overly prescriptive rules. Instead, businesses will benefit from additional flexibility to deliver propositions that work for their customers, in line with the overarching objective of delivering good outcomes under Consumer Duty.”