The FCA has just updated on the work that it had stopped or postponed in order to allow it to focus on the more urgent work that has been required of the regulator as a result of the Covid-19 pandemic and the resultant economic turmoil.
The FCA’s statement commented on its work in relation to a new duty of care for firms (and potential alternative approaches), which had been delayed due to Covid-19. The FCA had intended to consult on this topic by the end of the year. It has now updated that and stated it hopes to consult on the topic in the first quarter of 2021.
By way of reminder, back in 2018 the FCA published a Discussion Paper, which considered that the current regulatory and legal regime relevant to the duty of care did not go far enough, and that the regulator may need to consider what form a new duty of care might take, and how it might be implemented. For more information and comment on the Discussion Paper and the current regulation, see our previous blog post here.
The period for feedback on the publication of the Discussion Paper ended on 2 November 2018, and in April 2019 the FCA published a Feedback Statement containing a summary of the responses. Most respondents agreed that “levels of harm to consumers are high”, but there was disagreement around whether a new duty was the correct way forward, or whether changes should be made to the existing regulatory framework.
In light of this, the FCA confirmed in the Feedback Statement, and re-iterated in its recent update, that it is committed to reviewing how it applies the regulatory framework, and in particular the Principles for Business, focusing on “how new or revised Principles could strengthen and clarify firms’ duties to consumers”. The FCA further confirmed that it will look to examine which options are “most effective and proportionate”.
Firms should keep an eye out for the consultation response in Q1 2021, to ensure that they are able to comply with any new duty obligations, or any new or revised Principles for Businesses, if or when they come into force.