With principle adherence a common failing when the FCA reviews compliance standards, advice firms should be aware of a new principal and changes to PRIN 2A coming in with the Consumer Duty, says ATEB Consulting’s Huw Reynolds
There are in excess of 50 FCA Handbooks (rules and guidance). You cannot be expected to be conversant with all of them, but you should have a good handle on the key ones, such as the various Conduct of Business handbooks.
One that may not be at the forefront of your minds is PRIN: Principles for Business, but it really should be, because the FCA often highlights a failure of principle adherence when reviewing compliance standards.
Now, on 31 July 2023, the Consumer Duty rules start for all open products and services – pretty much for most of your business activity. At that time, the PRIN handbook changes:
- There is a new Principle 12: “A firm must act to deliver good outcomes for retail customers”.
- There is a new chapter PRIN 2A: The Consumer Duty.
Both the above can be viewed by forward dating the FCA Handbook as follows:
In general terms, Principle 12 and PRIN 2A impose a higher and more exacting standard of conduct in relation to a firm’s activities relative to what the current Principles 6 or 7 would have otherwise required.
Principle 12 and PRIN 2A also have a broader application in relation to a firm’s activities relative to Principles 6 and 7, with a greater focus on consumer protection outcomes for retail customers.
PRIN 2A has 11 sub-sections that very much reflect the guidance detailed in Finalised Guidance FG22/5 (non-Handbook Guidance for firms on the Consumer Duty).
This reinforces the FCA’s strong commitment to the Consumer Duty.
A recent survey suggested that many firms are well behind the curve in implementing the requirements. We recommend that you familiarise yourself with PRIN and in particular these two new important aspects. FG 22/5 provides more useable advice to support the new rules and guidance in PRIN 2A.
