A ‘new’ Consumer Duty – or same rules, more layers?

Are the regulator’s CP21/36 proposals truly novel or just clarifications and extensions of existing rules along with “further layers of regulatory gunge”? Adam Samuel comments on how the FCA “proposes to make a mess of its current rulebook”.

Adam SamuelBA LLM DipPFS MCISI FCIArb Certs CII (MP&ER) Barrister and Attorney may be contacted atadamsamuel@aol.com.For links to where you can buy the second edition of ‘Consumer Financial Services Complaints and Compensation’, see www.adamsamuel.com/book.

The Financial Conduct Authority’s CP21/36 predictably suggests the creation of what the regulator calls its ‘Consumer Duty’. In fact, the consultation proposes a duplication of the rules already found in Principles 6 (treating customers fairly) and 7 (clear, fair and not misleading) as well as the various financial promotions rules located in the different conduct of business sourcebooks for each sector. It extends the product governance regime currently found in PROD beyond insurance and investments, not by the sensible creation of a further chapter of that rulebook to cover the new areas but by inviting an incomprehensible new Principle and a proposed PRIN 2A. Finally, the new proposals put into rule form obligations relating to customer service that can be inferred from Principle 6. These would be welcome as either new COBS or PROD rules but not as a way of congesting the PRIN rulebook.