On 7 December 2021, the FCA published its second Consultation Paper (CP21/36) on introducing a new Consumer Duty. This follows its earlier consultation in May 2021, in which the regulator which set out high-level proposals for how the Consumer Duty would work.
Following analysis of responses received from the first consultation this second consultation paper now sets out sets out in draft the detailed rules and guidance required to bring the Duty into force.
The purpose of the new Consumer Duty is to ensure a higher level of consumer protection in retail financial markets, so firms can deliver good outcomes for retail customers and consumers can make informed choices financial products and services.
Whilst there are many firms in the retail sector who demonstrate good practice to ensure good consumer outcomes, the regulator has seen also evidence of practices which cause consumer harm by providing information which is misleadingly presented or difficult for consumers to understand.
The new Consumer Duty is proposed to have three components:
A new Consumer Principle that provides an overarching standard of conduct
Cross-cutting rules designed to support the new Consumer Principle.
Four outcomes setting out more detailed expectations for how firms can meet the new Consumer Principle.
The FCA has asked for responses to this second consultation by 15 February 2022, with the new rules due to be published and come into force on 31 July 2022.