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The Financial Conduct Authority (FCA) has announced a call for input (CFI) from a range of stakeholders, including financial firms. The CFI focuses on the review of the FCA’s retail conduct requirements following the introduction of the Consumer Duty. In launching this CFI, the FCA aims to simplify retail conduct rules and guidance by addressing complexity, duplication, confusion and over-prescription, specifically where these requirements overlap with the Consumer Duty.
The bigger picture
The CFI marks precisely one year following the implementation of the Consumer Duty to new and existing products or services on July 31, 2023. It also comes ahead of the implementation deadline for closed products or services on July 31, 2024.
Through the CFI, the FCA aims to reduce unnecessary regulatory costs for financial firms, while simultaneously providing flexibility to adapt to future changes and innovation. In the broader picture, this aim is aligned with the FCA’s secondary objective released in July 2023 to enhance the international competitiveness of the UK economy and support its growth in the medium-to-long term. Pursuant to Section 1B(6)(a) of the Financial Services and Markets Act 2000 (FSMA 2000) on the FCA’s general duties, this secondary objective includes the authority’s rule-making function considered as a whole, across the entire financial services sector.
Additionally, as explicitly confirmed by the FCA, the CFI’s goal is not to gather feedback on potential changes to the Consumer Duty itself, which would be subject to separate initiatives. Instead, the FCA invites comments on the following issues:
- Identifying detailed rules or guidance that could be simplified to rely on high-level rules, or where interactions with other rules could be clarified.
- Assessing how steps to simplify rules and guidance might affect the FCA's statutory objectives.
- Determining the appropriate balance between high-level and detailed rules.
- Evaluating the potential benefits and costs of simplifying rules.
Why should you care?
The FCA has stated that this CFI would be of interest to firms and industry bodies that follow FCA rules, as well as to consumers, consumer groups and other parties due to the impact these rules have on their interests.
By engaging with this CFI, payment service providers (PSPs), as well as financial firms in general, have the opportunity to shape a regulatory framework that could reduce unnecessary burdens and foster innovation and growth.
Specifically, smaller firms and new entrants may be particularly interested in responding to the CFI, as, from a competition perspective, the CFI may level the playing field. The FCA recognises these entities can benefit from having more clearly stated regulatory expectations, which would help them grow their businesses compliantly and confidently, ensuring they meet all regulatory requirements.
Interested entities can send their feedback to the FCA by October 31, 2024 by:
- Using the FCA’s online response form.
- Sending an email to ReviewOfRequirementsCFI@fca.org.uk.
- Writing to: Consumer Policy and Outcomes, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.
The FCA plans to engage with a broad range of stakeholders over Summer and Autumn 2024. The FCA will then publish an approach based on the received feedback in early 2025.
