The petition of residents of the constituency of Linlithgow and East Falkirk,
Declares that the Financial Conduct Authority’s (FCA) efficacy in overseeing the UK’s financial markets has come under scrutiny; further that the FCA has repeatedly failed in its remit to protect financial markets and consumers; further that such failures have adversely affected consumers and the industry; and further that, despite Section 29 of the Financial Services Act 2021 stating that the FCA must carry out a public consultation on whether it should make general rules providing that authorised persons owe a duty of care to consumers, the FCA consultation is entitled “A new Consumer Duty”, which differs from a duty of care—the legal definition of which we believe is not accurately described in that consultation—and would still require consumers to be beholden to the FCA to take action on their behalf.
The petitioners therefore request that the House of Commons urge the Government to ensure the FCA meets the intention of Section 29 of the Financial Services Act 2021, which if enacted in its true spirit, will strengthen consumer protection and the safety of our financial system going forward by creating a right of private action.
And the petitioners remain, etc.—[Presented by Martyn Day, Official Report, 20 July 2021; Vol. 699, c. 930.]
Observations from The Economic Secretary to the Treasury (John Glen):
The Government thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for submitting a petition on behalf of his constituents about the Financial Conduct Authority (FCA) and Section 29 of the Financial Services Act 2021.
The Government are committed to ensuring financial services consumers are protected. The Government enshrined this commitment in legislation through the Financial Services Act 2021 (the Act).
Section 29 of the Act requires the FCA to consult on whether it should make rules providing that authorised persons owe a duty of care to consumers. It also obliges the FCA to publish its analysis of the consultation responses by the end of 2021. Furthermore, it sets a deadline of 1 August 2022 for the FCA to make any rules on the level of care to be provided to consumers it considers appropriate, taking into account the results of the consultation.
In accordance with the requirements set out in the Act, the FCA published a consultation on 14 May 2021 proposing a new “Consumer Duty”. The Consumer Duty seeks to clarify and raise expectations for the standard of care that should be provided by financial services firms to consumers. This aims to ensure consumers benefit from a higher level of care from financial services firms. The consultation also invites views on the introduction of a private right of action.
As set out in paragraph 2.31 of the FCA’s consultation paper, the consultation’s proposals have been specifically designed to meet the requirements of the Financial Services Act 2021. The FCA, as an operationally independent regulator, is responsible for carrying out the consultation and for making any new rules which it considers appropriate following the consultation. It would therefore be inappropriate for the Government to comment further on the specifics of the proposals.