Investing body reacts to minister’s critique of consumer duty

The Investing and Saving Alliance (Tisa) has said it supports the “admirable ambition” of the new consumer duty but warned “the devil is in the detail”, in response to the City of London minister’s damning critique of the policy.

Earlier today, The Financial Times reported that Andrew Griffith was “scathing” about the regulatory reforms during a recent dinner with City bigwigs. He raised concerns that the administrative and compliance burdens could damage the financial services sector at a time when the Treasury is trying to relax other rules to heighten post-Brexit opportunities.

Lisa Laybourn, head of technical policy at Tisa, heralded the new consumer duty for its aim in protecting people’s financial wellbeing, including the most vulnerable.

“This is an admirable ambition, and one which TISA supports,” she said. “However, as with all regulatory change, the devil is in the detail.

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“Many within already highly regulated industries such as the investment sector have justified questions about additional steps they need to take before the duty is fully enforced. Further governance checks and evidencing of existing compliance are vital, but they must look beyond this.

“Better communication with customers is one key example. For communication to be effective in increasing consumer engagement, it needs to be delivered in a way that they will understand.”

Laybourn noted that identifying other areas of improvement will take time, and firms face challenges in reviewing all their processes within the implementation timeframe.

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“The Consumer Duty is a worthwhile initiative that will refocus providers on the needs of the consumer, and many firms have already made significant process in operationalising the duty,” she said. “But it requires detailed guidance and support from regulators in the implementation phase, as well as time and effort from providers.

“It is our hope that the City minister’s reported comments spur further conversations between firms, government and regulators on prioritising consumer-friendly measures as part of the duty’s implementation process.”