On 23rd April, the FCA published Feedback Statement FS19/2 on its summary of responses and next steps in relation to a duty of care and potential alternative approaches.
The statement will be followed up by a further paper which will be published in autumn 2019 which will seek detailed views on specific options for change. Following its initial analysis, however, the FCA have noted that the following action might deliver a higher degree of consumer protection:
- reviewing how they apply the regulatory framework in particular the application of the Principles and how these are communicated to firms
- the introduction of new/revised Principles which strengthen and clarify firms’ duties to consumers including considering whether a new private right of action for breach of Principles should be introduced.
The paper also explores the case for change – whether change is required due to the levels of harm to consumers or whether the FCA’s current approach is working and should continue (in particular whether initiatives such as the SM &CR should have more time to embed).
It then goes on to discuss the options for change, being:
- introduction of a new principle based duty
- introduction of a new statutory duty of care
- revising the Principles for Business
- introduction of a private right of action for breaches of the Principles
- creating a fiduciary duty of firms to their customers
In advance of the Autumn paper being published, the FCA will continue to undertake further work to examine which options are likely to be the most effective and proportionate.