The chancellor has charged the Financial Conduct Authority (FCA) with reassessing the impact of its Consumer Duty on financial services and the way “businesses interact with other businesses”.
Delivering her Mansion House speech last night chancellor Rachel Reeves said: “I have tasked the FCA with assessing the impact of the Consumer Duty and whether it unduly affects wholesale activity.”
In a subsequent statement HM Treasury confirmed: “The Financial Conduct Authority’s Consumer Duty rules were also intended to raise standards in how finance companies treat retail consumers, but today affect the way businesses interact with other businesses – such as investment banks and asset managers.
“The Financial Conduct Authority will therefore assess how the Consumer Duty applies to these wholesale firms.”
Health & Protection has asked the Treasury if the FCA’s assessment of Consumer Duty and whether it unduly affects wholesale activity will include financial advisers and brokers interacting with insurers and other similar relationships.
Loosening the rules
However, Alan Lakey, director at Highclere Financial Services and CIExpert (pictured), believes in practice, there is very little the regulator can do.
Lakey told Health & Protection he read Reeves’s statement as a loosening of the rules with investments – trying to get people to invest in shares as opposed to cash.
“There’s a loosening of the rules which was reflected yesterday in talking about bringing in a form of long stop having stolen it from the sector about 24 years ago,” Lakey said.
“These are all entwined,” he continued.
“This is pressure from the government to bring in a loosening of the rules, something they promised many years ago when they got Vince Cable in as the minister of red tape. He didn’t cut any red tape, so that didn’t work.
“So it’s a strange thing, so you’ve now got the tail wagging the dog.”
Whispers around corners
Lakey added that such a move from the government would not normally be done so overtly.
“This government and chancellor has decided to go public on what she wants various sectors to do to enliven the economy,” Lakey said.
“There’s bound to be an impact.”
But on whether the FCA’s assessment would weaken Consumer Duty, Lakey added he did not think it will.
“I don’t think they dare do that,” Lakey continued.
“I’ll be honest. I’m not sure they’ll do anything. They might do that old trick that is typical of ‘say the right words, but do nothing’. That’s quite possible isn’t it?
“There’s quite a chance that they will come out with wise words about how we’re doing this and lightening up here and so forth, but in practice they probably won’t,” Lakey said.
