UK finance voices concerns over consumer bond proposals
UK Finance has claimed the city watchdog’s consumer bond proposals contain ‘significant problems’ and will take businesses at least two years to comply.
In December, the Financial Conduct Authority (FCA) unveiled plans to introduce a new consumer requirement by July 31, 2022 for all regulated businesses, including peer-to-peer lending platforms.
All companies will be required to test and show that consumers are receiving good results and that their communications are clear.
Consultation on these proposals ended yesterday (February 15) and the regulator plans to issue a policy statement summarizing the responses and setting out new rules by July 31, 2022.
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UK Finance has welcomed changes made by the FCA since its first consultation on the duty, such as removing the general requirement for firms to take “all reasonable steps” to avoid causing foreseeable harm to retail customers and enable them to achieve their financial goals, and replace that with “focus on acting responsibly.”
However, the trade body said “significant issues” remained and that there were many inconsistencies and tensions between the obligations and the current FCA handbook requirements.
UK Finance said that given the time needed to review and adjust to the requirement, the proposed implementation timeframe is too short and needs to be at least two years to allow businesses enough time to conform.
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“The FCA rightly describes the consumer duty as a ‘fundamental shift’ in its approach to regulation, and we have supported the intent behind the duty since its inception,” UK Finance said in its response to the consultation. of the FCA.
“Done well, this will allow the FCA to more quickly identify harmful practices and intervene before they take root. We welcome the changes made by the FCA since its first consultation on the requirement, which have reduced the risk of unintended consequences.
“Significant problems nevertheless remain, particularly with regard to the implementation period, retrospection and interpretation by the financial ombudsman service, with the consequent risk of financial exclusion.
“We also have significant doubts about FCA’s cost/benefit analysis. We and our members therefore wish to continue to work with the FCA to address these concerns as it finalizes its reflection on the form and content of Le Devoir. We all want this to succeed.