The Financial Conduct Authority has called for examples of the retrospective application of regulatory rules, in a direct response to complaints received as part of a recent consultation that stricter interpretation of rules applied with the benefit of hindsight create uncertainty for firms.
In a request for examples published today (21 August) online, the FCA said the action followed the publication of the outcomes of work on the perceived ‘expectations gap’ between regulators and industry.
This work considered how any differences in understanding between regulator and industry might affect the quality of products and services that consumers receive, or inhibit consumer-friendly innovation, it said.
The regulator published guidance in July to support firms providing simplified advice and non-advised sales, and is separately seeking input from financial services firm on ‘Project Innovate’ which seeks to encourage firms to bring new models to market.
The FCA said it was aware that firms were concerned about how complaints would be handled by the Financial Ombudsman Service and whether regulation would be applied retrospectively.
However, it said it has also heard from firms that they are held back from innovating by retrospective regulation, that is “a more demanding standard or interpretation of the rules after the event with the benefit of hindsight”.
The FCA said it is interested to hear from firms about times when they believe the it, or the FSA, applied its rules retrospectively.
The regulator has asked for comments by 10 October, with examples used to feed into continuing work on its approach to communicating with the industry.
