The Transparency Task Force (TTF), a pro-consumer lobby group, has decried the Financial Conduct Authority (FCA) over its Consumer Duty rules, saying it fails to adequately protect the interest of consumers.
The group said the FCA’s Consumer Duty final rules for firms, which were published on 27 July, did not provide consumers with the right to private action in the event they were to suffer financial loss.
“We at the Transparency Task Force are very disappointed with this development. We appreciate that the Consumer Duty is a step in the right direction. But it does not go far enough to include a private right to action,” TTF founder and consumer campaigner Andy Agathangelou tells Mortgage Strategy sister magazine Money Marketing.
“If it did have a right to private action, it would enable consumers to seek redress and compensation in the event that they were dealt with badly by a financial company.
“Because it doesn’t have a private right to action it means that consumers, investors and pension savers and so on are already dependent upon the FCA to organise some restitution if firms acted badly.”
Agathangelou says the FCA should have included a duty of care in the Consumer Duty “in keeping with the requirement of the Financial Services Act 2021,” adding that it would have been the ideal outcome for consumers.
It would have provided consumers with “legally enforceable rights for being treated correctly”.
He says the FCA, which has a track record of what he called “chronic and catastrophic regulatory failure”, already has powers to ensure firms in the financial services sector act in the best interests of consumer.
He points out that the FCA’s Treating Customers Fairly is one example of a rule book that the regulator is under utilising.
“One of the themes we have seen time and time again is not the FCA having the power necessary, they already have the powers under the Treating Consumers Fairly. What the FCA consistently fails to do is to enforce robustly against the powers that it got,” said Agathangelou.
“Another very good example is the Senior Managers Certification Regime (SMCR) where the Freedom of Information (FOI) request completed by TTF Mark Bishop showed that that regime is hardly being used at all. There is a very clear pattern that whatever the powers the FCA had it would consistently under utilise them.”
The FCA has been contacted for comment.
Last week, the regulator published its much-awaited Consumer Duty final rules which introduced higher level of consumer protection across retail financial markets.
It extended the implementation deadline by a year (July 2023) to give firms more time to plan for it.
The FCA says it expects firms to carry out all implementation planning by the end of October this year.