Britain’s Financial Conduct Authority (FCA) is examining how to ease regulatory burdens on the country’s financial services, specifically looking to lower costs and foster innovation.
The financial regulator is undertaking a review of the various rules Britain’s finance, banking and payments firms need to adhere to. The Consumer Duty is significant to this, with the FCA looking to identify rules which could be removed or simplified if found to overlap with the duty.
Introduced in 2022, the duty includes a number of requirements British finance firms must adhere to. Ending ‘rip-off’ charges and fees, making switching or cancelling products easier and providing helpful and accessible customer support are just some of these.
By reducing overlap with the duty and by extension the complexity of its ruleback, the FCA hopes to lower costs for businesses and encourage innovation. Supporting ‘risk appetite’ in the UK as well as growth and boosting the UK’s international competitiveness and economy are other objectives.
Nikhil Rathi, FCA Chief Executive, 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 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 FCA has mapped out some other initiatives in tandem with the regulatory review into financial services. A similar review into the £15.5bn British commercial insurance sector will take place concurrently.
A separate process, encompassing the breadth of Britain’s finance industry, will see the FCA consult a panel of experts to prepare cost benefit analysis, applied to regulations which have an estimated net annual direct cost to the industry of £10m and above.
British financial companies face a range of regulations, many of which have associated costs. Not all of these regulations fall under the purview of the FCA, however, with the Payments System Regulator (PSR) and the Prudential Regulatory Authority (PRA) also significant agencies.
Many payments firms are concerned about regulations being brought in by the PSR later this year. The rules will require firms to bear the brunt of reimbursement for fraud victims, something which the payments industry believes is ignoring the responsibility shared by social media platforms.
