Regulation  

FCA wants to 'break new ground' with consumer duty

FCA wants to 'break new ground' with consumer duty
FCA chief executive, Rathi Nikhil

Financial Conduct Authority chief executive Nikhil Rathi has said the regulator was “at the foothills” of becoming more “innovative, adaptive, assertive and proactive” and was breaking "new ground" with the incoming consumer duty.

In a speech delivered at the Peterson Institute for International Economics in Washington DC yesterday (July 14) the FCA boss called for more international collaboration as he outlined how the regulator wants to future-proof the UK financial sector. 

Rathi touched on the new consumer duty and said the FCA “wanted to break new ground” with it to ensure all firms take account of the actual impact of their services and product suitability on the consumer. 

Article continues after advert

“Selling someone the right product, easily understandable with suitable customer service is hardly controversial but, too often, even established firms aren’t delivering,” he said.

Speaking about the UK's future outside of the European Union, Rathi told delegates: “Having departed from the EU, in the UK, we now have a vital opportunity to further adapt our regulatory system to respond to the challenges we are seeing today and continue to bolster the global reach of our wholesale markets."

Posture

Outlining a number of changes made by the FCA in the last year, Rathi said the regulator has already changed its operational posture. 

“We are running more quickly to tackle complex issues, even if they are outside of our jurisdiction. And by maintaining high global standards, we remain a world leader in enabling innovation.”

Pointing to the fact the FCA has been expanding outside of London, Rathi said 500 FCA staff have joined this year working in Edinburgh, Scotland and Leeds, with 1,000 new staff expected before the year end. 

He also commented he was encouraged to hear how many US financial services firms were actively looking to build presence in Scotland and the wider regions of the UK, to “tap the high-quality expertise and skills base they offer".

A different type of UK regulator

Explaining the changes made to how the FCA operates, Rathi said the regulator wanted to address threats, and not just address issues after significant harm or risk has been embedded.

He said it was investing in analytics tools, data and tech platforms and explained that a move last year of some of its core systems to the cloud would enable the FCA to identify and react more swiftly to firm and market issues. 

The fact the FCA now automatically scans 100,000 websites a day for fraudulent or scam activity was also mentioned, while Rathi said the FCA was “increasingly holding firms to account”.

Reference was also made to a joint discussion paper with the BOE that will be published soon to set out new measures to tackle potential systemic risks posed by the financial services sector relying on the services of a small number of critical third parties – including cloud providers.

“Many of the issues we face also require an international response.