Without the firepower, FCA will struggle to back up its shake-up with enforcement – comments from specialist regulatory compliance lawyer

by | Jul 31, 2023

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Following the introduction of the FCA’s much-anticipated Consumer Duty, financial regulatory compliance solicitor Alessio Ianiello, associate in the Investment Fraud & Mis-Selling team at specialist group action law firm Keller Postman UK has shared his thoughts.

He said: “It is no industry secret that the FCA is currently overstretched, and it remains a concern that unless it deals with its own resourcing issues, it is difficult to see how they will effectively police and enforce the Consumer Duty.

“It will require a much greater level of proactiveness if this policy is going to be effective in tackling instances of mis-selling. The FCA has not always been on top of the ball when it comes to protecting consumers, particularly those with existing vulnerabilities, with a prime example being the British Steel Pension Scheme, where thousands of scheme members fell victim to predatory and commission hungry advisers.

 
 

“While Principle 12 of the Consumer Duty rightly seeks to ensure that “a firm must act to deliver good outcomes for retail clients”, these enforcement concerns are subjective in nature: what might be a “good outcome” for the retail client may not necessarily be deemed a “good outcome” by the firm.

“Focussing on the specific needs of the client will likely result in additional costs being incurred by regulated firms. While larger firms will be able to weather the increased associated costs, it is likely that smaller firms will struggle to do so and may be priced out of the market altogether. Ultimately, it may be the customer who bears the true costs of these smaller firms leaving the market as such a move will reduce their overall selection of firms to go with.”

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