The Financial Conduct Authority (FCA) has announced a call for input on its own rules, giving firms, consumer groups and policy makers the opportunity to share their views “on rules that should be reviewed and the potential benefits and costs of doing so”.
The body is seeking views on “potential areas of complexity, duplication, confusion, or over-prescription, which create regulatory costs with limited or no consumer benefit,” the release read.
Coming under scrutiny are the areas of its rulebook which potentially undermine Consumer Duty, the outcomes-focused regulatory approach that came into force approximately a year ago, with the aim of reducing paperwork and supporting economic growth.
“There may be a lack of clarity on how requirements under the Duty and under other rules interact: Being clearer on the standard of conduct that applies should reduce regulatory uncertainty and lower firms’ compliance costs,” the report read.
“This could involve, for example, removing materials that set similar, but not identical, requirements or expectations to those under the Duty, or giving guidance on how sectoral requirements and requirements under the Duty interact.”
Smaller firms in particular have had longstanding concerns about the length and complexity of FCA rules and guidance, and the regulatory body is hoping to understand “whether, where and how we can simplify our requirements through greater reliance on high-level rules, while ensuring we continue to support and protect consumers”.
According to Tom Selby, director of public policy at AJ Bell, the review “effectively turns the Consumer Duty rules back on the regulator”.
“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,” he said.
“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.”
The industry will be able to submit its views by 31 October 2024.