PIMFA raises concerns about FCA’s ‘woolly’ Consumer Duty proposals

7 December 2021

PIMFA raises concerns about FCA’s ‘woolly’ Consumer Duty proposals

PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, has called for greater clarity from the Financial Conduct Authority (FCA) in its proposals for a new Consumer Duty and questioned whether the current proposals will remove bad actors from the market as intended.

Tim Fassam, Director of Government Policy and Relations, commented:

“The FCA has put significant stock in the Consumer Duty being fundamental to its regulatory and supervisory approach going forward. Whilst we do agree that it is right that the FCA looks to assert a standard of higher consumer protection, we are slightly disappointed that despite wide ranging calls for clarity on its proposals, the rules and accompanying guidance published remain somewhat theoretical and woolly.

“PIMFA retains concerns that the inherent subjectivity of the Consumer Duty will ultimately lead to confusion both for consumers and firms in terms of their expectations of a good outcome, and without clarity on what the FCA’s expectations of the Financial Ombudsman Service (FOS) are, and how, or if, they will be codified, we would be concerned that this could lead to a significant rise in cases brought against firms through no fault of their own.

“PIMFA are confident the vast majority of firms in our sector are already operating at, or above, the FCA’s expectations and to an extent, this confidence transmits to the broader financial services sector.

“Our concern, as we set out in our initial response, is that there are clearly firms operating within the market who either choosing not to follow the rules or struggling to meet their current obligations under them. Introducing new rules and regulations at significant cost to well-run firms will have little to no impact on the firms which are already not meeting their obligations.

“In order for these reforms to be worthwhile and impactful, the Consumer Duty needs to empower the FCA to finally drive the bad actors out of the market through effective supervision and enforcement. It is unclear to us whether or not this will actually be the case.”

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About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA is the trade association for firms that provide investment management, investment services and advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
• PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, the Future of Supervision, & the FSCS levy – read more.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376

Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225