The Financial Conduct Authority (FCA) will reassess the application of its regulatory framework and consider new consumer powers after facing opposition to proposals to impose new rules on firms covering "duty of care".
Responses to the regulator's July 2018 discussion Paper A duty of care and potential alternative approaches, published today (23 April), dismissed the idea of new legislation, which would place new legal requirements on regulated firms to act in the best interest of customers.
Respondents said the plan was unnecessary, covering requirements already embedded in existing regulation suc as the Senior Managers and Certification Regime, while others warned a new statutory requirement would be difficult to apply to a range of different business-customer relationships.
There were also concerns that duplicating existing standards would create unnecessary legal complexity.
However, respondents who did support the need for new statutory obligations said they thought it would trigger necessary cultural change, forcing firms to ask, ‘is this right', rather than, ‘is this within the rules?'.
In response to the limited appetite, the FCA said it would return with a new paper in autumn this year that will seek "detailed views on specific options for change, as part of our work on the future of regulation more generally".
Specifically, the FCA will review how it applies its regulatory framework, particularly with regard to authorisations, supervisory and enforcement functions, and how it communicates this to firms.
It will also consider both new and revised principles to "strengthen and clarify firms' duties to consumers", including the potential for a private right of action for breaches of FCA rules.
The regulator will continue its ongoing work around culture in financial services "to help firms develop a clear understanding of what a healthy culture looks like, understand its benefits and ensure they are able to take proactive steps to change any ineffective cultures in their organisations".
Commenting on the response to the regulator's proposals, FCA chief executive Andrew Bailey said he was "pleased that so many people shared their views with us as part of this process".
He added: "Inevitably, there were a range of opinions about what would secure the right level of protection for consumers.
"Given their long-lasting impact, we now want to weigh-up possible changes, including whether reworking our principles of business is the right way forward."