City of London minister ‘scathing’ about consumer duty

City of London minister Andrew Griffith has criticised the Financial Conduct Authority’s (FCA’s) consumer duty arguing that it could be harmful to the financial services sector.

According to The Financial Times, one industry source said Griffith was “scathing” about the regulatory reforms during a recent dinner with senior figures from the financial services sector. Another said he had been highly critical of the move.

Industry leaders have long-voiced concerns over the potential for the consumer duty to inflict unworkable administrative burdens on the industry and potentially lead to vexatious lawsuits. Griffiths is reported to want to avoid a “compensation culture” arising from the changes.

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Colleagues of the minister told the newspaper that Griffith is worried that the new rules come as the Treasury is trying to relax other City rules in a bid to heighten post-Brexit opportunities.

The minister is understood to have raised his concerns with the FCA and reminded the regulator that the government’s financial services bill includes an objective for watchdogs to promote economic growth and competitiveness.

In a speech last week, FCA head of consumers and competition Sheldon Mills made a speech arguing that the consumer duty could ‘radically improve’ financial services businesses.

“Thinking differently and exposing yourself to meaningful change is at the heart of innovation,” he said. Adding that the new regulations could “provide an opportunity to inspire customer loyalty”.

Mills admitted that some firms were still not ready for the new regulations, which come into force on 31 July.

He urged a small number of firms that had “seen the task as too big and adopted an avoidance tactic” to “act now” in preparation of the deadline.

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