Consumer Duty needs credible enforcement threat – AJ Bell

The Financial Conduct Authority (FCA) needs a credible enforcement threat for firms failing to meet the new Consumer Duty, investment firm AJ Bell has warned.

Today the regulator set the clock ticking on the final implementation of the new rules which are aimed at bolstering consumer protection and clearing up ambiguity in current regulation.

Tom Selby, head of retirement policy at AJ Bell, said: “One of the big challenges facing the FCA is ensuring there is a credible threat of enforcement for firms that fail to meet its expectations.

“The inconvenient truth is that ‘good’ firms are likely to already be meeting much of the regulator’s new expectations, while ‘bad’ firms are often flouting the existing rules.

“To raise the laggards up to the standard of ‘good’ firms, the FCA will need to demonstrate ‘bad’ firms will be punished.

“The Financial Ombudsman Service (FOS) will also play a critical role in interpreting the Consumer Duty on the ground.

“There is a very real risk that spurious complaints will be made against firms by Claims Management Companies (CMCs) looking to take advantage of the new standard.

“The regulator will need to watch CMCs like a hawk and come down hard on any dodgy behaviour.”

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