Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Britain's financial watchdog reveals plan to bolster consumer protection

Stock MarketsMay 14, 2021 11:08AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: The City of London financial district can be seen as people walk along the south side of the River Thames, amid the coronavirus disease (COVID-19) outbreak in London, Britain, March 19, 2021. REUTERS/Henry Nicholls 2/2

By Huw Jones

LONDON (Reuters) -Britain's financial watchdog on Friday proposed new "consumer duty" rules for financial services to protect people from scams and mis-selling, which have tarnished the industry for decades.

Retail investors in Britain have suffered from mis-sold financial products, including endowment mortgages, pensions and payment protection insurance. Taxpayers are also having to help investors who suffered losses after the collapse of London Capital & Finance (LCF) investment firm.

The Financial Conduct Authority is proposing that financial services firms, which currently have an obligation to treat customers "fairly", would in future explicitly have to act in the best interest of retail customers when selling products or services, or act to deliver good outcomes. The wording will be finalised after a public consultation that closes in July.

This would require a significant shift in culture and behaviour for many firms who would have to demonstrate they took "all reasonable steps" to avoid foreseeable harm to their customers, the FCA said.

However, it stops short of the stronger statutory duty of care called for by some stakeholders to allow consumers to sue financial firms for redress.

Consumers currently must rely on the Financial Services Ombudsman, which was unable to compensate many LCF investors.

Under the proposed rules, firms that do no comply could face enforcement action.

Firms involved in making and supplying financial products and services would also be covered by the new rules, even if they are not in direct contact with the end customer, the FCA said.

Simon Morris, partner at CMS law firm, said the proposals mostly repackage current rules and policies for greater impact after the FCA was stung by LCF and other high-profile failures of supervision.

But if the option of forcing firms to deliver good outcomes was selected it would be a "toxic formula for creating undeliverable expectations", Morris said.

Sheldon Mills, the FCA's executive director for consumers and competition, said the measures were significant, though he recognised there was a debate to be had over whether it would be enough.

The watchdog is also consulting on the potential benefits of attaching a "private right of action" to the new duty to allow consumers to sue in court.

Any new rules would be drawn up by July 2022.

Britain's financial watchdog reveals plan to bolster consumer protection
 

Related Articles

Fed shift causes rally in value stocks to wobble
Fed shift causes rally in value stocks to wobble By Reuters - Jun 20, 2021

By David Randall NEW YORK (Reuters) -The Federal Reserve's hawkish shift is forcing investors to reevaluate the rally in so-called value stocks, which have taken a hit in recent...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email