The chief executive of the Financial Conduct Authority, Martin Wheatley, said a key difference to the previous regime was flagged by the use of the word “conduct” in its name, which he said reflects the different focus compared to its predecessor.
Sona Ganatra, senior associate at Fox Williams, says that the FCA’s stated focus on firms’ conduct means it is intent on bringing about a cultural change to the financial services industry, “with customers, as opposed to profit, being at the heart of business”.
To achieve this the new regulator has a host of new tools and powers at its disposal, especially in relation to product intervention, she adds.
“In line with its consumer protection objective, the FCA has been granted unparalleled powers of intervention which will enable it to ban or restrict financial products and misleading financial promotions without consultation.”
The FCA wants to understand consumers’ actual experiences of dealing with firms, adds Rebecca Prestage, head of policy at the Consulting Consortium.
“They will be moving from a reactive approach to a more proactive one where it will seek to address issues before they adversely affect the consumer.”
Not everyone is positive, however. Simon Morris, financial services partner at CMS Cameron McKenna, believes the focus on conduct is worrying.
“It means the FCA is going to be shrill, consumerist and interventionist – tending towards the consumer,” he says.
“I think it is certainly looking more closely at three areas: Treating Customers Fairly generally, specific responsibilities around the product distribution chain, and suitability.”