Financial watchdog proposes stiffer ‘duty’ to beef up consumer protection
The UK’s financial watchdog has tabled a proposal today for a stiffer “duty” on companies to protect consumers from scams and mis-selling.
Mis-sold financial products, including endowment mortgages, pensions and payment protection insurance have plagued retail investors for decades.
The Financial Conduct Authority (FCA) said the firms it regulates would need to follow the new duty or face enforcement action.
The watchdog has proposed that a firm would have to clearly act in the best interest of retail customers when selling products or services, or move to deliver good outcomes.
“Our proposals extend to firms that are involved in the manufacture or supply of products and services to retail clients, even if they do not have a direct relationship with the end customer,” the FCA said in a statement.
The new rules and expectations are set to be drawn up in July 2022 if the watchdog goes ahead with its proposal.
Firms will have to demonstrate they took “all reasonable steps” to avoid foreseeable harm to their customers, the FCA said.
The authority also said it was discussing the potential benefits of attaching a private right of action to the new duty.