FCA looks to reduce burdens on financial services firms
The UK’s Financial Conduct Authority (FCA) has launched a review of its rulebook as it looks to reduce burdens on financial services firms.
The move comes after the introduction of the Consumer Duty, which aims to ensure that businesses deliver good outcomes for consumers when they buy financial products and services.
As part of the review, the regulator is calling on the industry to identify rules which could be removed or simplified if they overlap with the Duty.
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The City watchdog said that reducing the complexity of its rulebook could lower costs for firms, encourage innovation and help support the risk appetite needed to support growth, ultimately boosting international competitiveness and the economy over the long-term.
“We are firmly committed to playing our part in supporting economic growth,” said FCA chief executive Nikhil Rathi.
“The Consumer Duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first.
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“We now want to seize the opportunity of the Duty and the move to a clear outcomes-based approach to streamline our rulebook, lowering costs for businesses and supporting the competitiveness and growth of the economy.”
Aegon welcomed the stocktake of the FCA rulebook in light of the Consumer Duty.
“We welcome the FCA’s Call for Input around how its rulebook might be streamlined as a result of the Consumer Duty,” said Steven Cameron, pensions director at Aegon.
“This is something Labour had said it would ask the FCA to undertake.
“Firms are embracing the Consumer Duty with its focus on delivering good consumer outcomes. The FCA is encouraging a flexible approach and it’s right to reflect on whether there are areas of the FCA’s rulebook which are unhelpfully prescriptive or simply no longer needed.
“We’re pleased to see the Call for Input refer to the Advice Guidance Boundary Review. Rulebook changes will be needed to make sure individuals can get the help they want, when they need it, at a price they can afford. The current advice guidance boundary has left a ‘support gap’ that needs filled.
“One area which might benefit from simplifying the rulebook is disclosure. The Consumer Understanding outcome within the Duty is very relevant here.
“However, there are times when having prescriptive rules to follow can be helpful to firms, or needed for consumer protection. When responding, we need to ‘be careful what we wish for’.”
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Additionally, the FCA is considering simplifying rules in the commercial insurance sector.
The launch of both reviews comes on the day the FCA published its first report dedicated to how it has taken forward its secondary objective to support UK competitiveness and economic growth over the medium to long-term.
The FCA said that it has improved its authorisation process, with 98 per cent of cases now assessed within statutory deadlines, up from 78.9 per cent in the first quarter of 2022/23.
The FCA has also confirmed that from 1 August, it will consult a new independent panel of experts when preparing cost benefit analyses. This applies to proposed regulations which have an estimated net annual direct cost to industry of £10m per year or more.
