"We now want to seize the opportunity of the Duty and the move to a clear outcomes-based approach to streamline our rulebook"
- Nikhil Rathi, chief executive of the FCA
The FCA has launched a new review which could lead to the rules governing financial services firms being streamlined.
The regulator is calling on the industry to identify rules which could be removed or simplified if they overlap with the Consumer Duty.
The FCA says reducing complexity of the FCA’s rulebook could "lower costs for firms, encourage innovation and help support the risk appetite needed to support growth, ultimately boosting international competitiveness and the economy over the long-term".
Alongside the rule review announced today, the FCA is considering simplifying rules in the commercial insurance sector, a market worth over £15.5 billion in the UK.
The FCA is inviting views on whether changing how customers are categorised could significantly reduce the time needed to take on new customers, or renew their contracts, and allow products to be custom made. This would reduce regulatory costs and could increase the competitiveness of the commercial insurance market.
The FCA has also announced that it improved its authorisation process with 98% of cases now assessed within statutory deadlines, up from 78.9% in Q1 of 2022/23.
Today, the FCA has also confirmed that from 1st August, it will consult a new independent panel of experts when preparing cost benefit analyses. This applies to proposed regulations which have an estimated net annual direct cost to industry of £10m per year and above.
Nikhil Rathi, chief executive of the FCA, said: "We are firmly committed to playing our part in supporting economic growth. The Consumer Duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first.
"We now want to seize the opportunity of the Duty and the move to a clear outcomes-based approach to streamline our rulebook, lowering costs for businesses and supporting the competitiveness and growth of the economy."
Steven Cameron, pensions director at Aegon, commented: “We welcome the FCA’s Call for Input around how its rulebook might be streamlined as a result of the Consumer Duty. This is something Labour had said it would ask the FCA to undertake.
“Firms are embracing the Consumer Duty with its focus on delivering good consumer outcomes. The FCA is encouraging a flexible approach and it’s right to reflect on whether there are areas of the FCA’s rulebook which are unhelpfully prescriptive or simply no longer needed.
“We’re pleased to see the Call for Input refer to the Advice Guidance Boundary Review. Rulebook changes will be needed to make sure individuals can get the help they want, when they need it, at a price they can afford. The current advice guidance boundary has left a ‘support gap’ that needs filled.
“One area which might benefit from simplifying the rulebook is disclosure. The Consumer Understanding outcome within the Duty is very relevant here.
“However, there are times when having prescriptive rules to follow can be helpful to firms, or needed for consumer protection. When responding, we need to ‘be careful what we wish for’.”
