A new mission or the status quo: FCA consults on its future approach to consumers

The FCA has recently published for consultation a document titled 'FCA Mission: Our Future Approach to Consumers'.
The document sets out the principles behind the FCA's future approach to regulating for retail consumers. This builds on other recent FCA publications such as its Ageing Population Occasional Paper, Financial Lives Survey, and Access to Financial Services Occasional Paper (which we considered in a previous FIsion blog post here) and provides yet more evidence that the FCA is taking a fresh look at the treatment of retail customers in financial markets.
The vision
It sets out the FCA's vision for well-functioning markets and provides initial insights into what "good" looks like for consumers. ‎It also explores what the "average" consumer in 2017 looks like and eludes to how this should inform the design and delivery of products and services. Amongst other statistics, the FCA points out that approximately 1 in 4 people have a physical or mental health condition lasting or expected to last for 12 months or more, and 1 in 5 people could not continue to cover living expenses for more than 1 month without asking for help from friends or family if they lost their main source of household income. Precisely how this should be translated into improved standards of conduct is not itself clear, but the FCA's inference seems to be that firms should be more mindful of what its "average" customer looks like (to the extent that there is such a thing) and deliver its services in a way that best accommodates those changing needs and vulnerabilities of that customer. In practice, this is very likely to mean that a one-size-fits-all approach will not suffice and more agile and tailored approaches should be explored.
Core principles
Whilst not new or surprising, the document reiterates how The FCA's future approach to regulating for retail consumers will be based around the following core principles:

  • Firm and consumer responsibility.
  • Regulating for vulnerable consumers.
  • Keeping pace with a changing environment.
  • Having regard to access and tackling exclusion.
  • Delivering better outcomes for all consumers.
Duty of care
The possibility of introducing a new "duty of care" was raised in the FCA's October 2016 'Our Future Mission' consultation and has reared its head again. According to the FCA, a number of stakeholders have identified a potential need for the FCA to introduce a duty of care for firms. This duty would impose an obligation for firms to exercise "reasonable skill and care" in the provision of services to consumers. It is unclear how this duty would differ from and work alongside existing conduct obligations, such as TCF or those in the Consumer Rights Act 2017. In light of this, the FCA has committed to carry out a thorough and detailed consideration of the issue against the effect on the FCA Handbook as a whole, which will happen after the dust has settled following Brexit ‎and relevant parts of EU legislation have been incorporated into UK law and the Handbook. The FCA intends to publish a discussion paper to explore the duty of care issue as part of the broader exercise of reviewing the Handbook at that stage.
Next steps
The FCA is consulting on questions raised in the document until 5 February 2018 and will publish its final approach in summer 2018. Given how much energy the FCA has expended on this paper in light of other pressing demands on its already squeezed resource, firms are encouraged to take seriously the FCA's future approach and try to make their voices heard before the FCA's mission is fully underway.

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