The rules governing financial services could be streamlined to reduce burdens on businesses, the FCA has said, following a review launched by the Regulator.
The move comes after the introduction of the Consumer Duty[1], which makes sure that businesses deliver good outcomes for consumers when they buy financial products and services. The regulator is calling on industry to identify rules which could be removed or simplified if they overlap with the Duty.
Reducing complexity of the FCA’s rulebook could lower costs for firms, encourage innovation and help support the risk appetite needed to support growth, ultimately boosting international competitiveness and the economy over the long-term.
Launching the review, Nikhil Rathi, chief executive of the FCA said: “We are firmly committed to playing our part in supporting economic growth. The Consumer Duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first.
‘We now want to seize the opportunity of the Duty and the move to a clear outcomes-based approach to streamline our rulebook, lowering costs for businesses and supporting the competitiveness and growth of the economy.’
The launch of the review comes on the day the Regulator publishes its first report dedicated to how it has taken forward its secondary objective to support UK competitiveness and economic growth over the medium to long-term.
The FCA added that it had sped up the authorisation process for enabling new financial services firms to get off the ground, with 98% of cases now assessed within statutory deadlines, up from 78.9% in Q1 of 2022/23.
Steven Cameron, Pensions Director at Aegon said the assurer welcomed the FCA’s Call for Input around how its rulebook might be streamlined as a result of the Consumer Duty.
Cameron said: “Firms are embracing the Consumer Duty with its focus on delivering good consumer outcomes. The FCA is encouraging a flexible approach and it’s right to reflect on whether there are areas of the FCA’s rulebook which are unhelpfully prescriptive or simply no longer needed.
“We’re pleased to see the Call for Input refer to the Advice Guidance Boundary Review. Rulebook changes will be needed to make sure individuals can get the help they want, when they need it, at a price they can afford. The current advice guidance boundary has left a ‘support gap’ that needs filled.
“One area which might benefit from simplifying the rulebook is disclosure. The Consumer Understanding outcome within the Duty is very relevant here.
“However, there are times when having prescriptive rules to follow can be helpful to firms, or needed for consumer protection. When responding, we need to ‘be careful what we wish for’.”