CII reacts to FCA plans to bring in new Consumer Duty rules
In response to the Financial Conduct Authority (FCA) confirming plans to bring in a new Consumer Duty, Matthew Connell, director of policy and public affairs of the Chartered Insurance Institute, said: “We welcome the confirmation from the FCA that consumers having strong confidence and levels of participation in markets is one of the key outcomes that they are looking for from the Consumer Duty. No market can exist without the confidence of the public, and it is important that we measure the key elements of confidence and trust in order to identify areas where changes are needed and where more regulation would be unnecessary. The CII has been measuring levels of trust in insurance since 2018, and we look forward to contributing our insights to the measurement of this important outcome.
“We support the FCA's move to outcome-based regulation. It is clear that detailed and prescriptive rules that were a regular feature of previous regulation, including European Union regulation, create unnecessary bureaucracy without necessarily providing better outcomes for the public. However, we also understand the concerns of some firms that outcomes-based regulation may leave them with responsibilities for outcomes over which they do not have complete control.
“The FCA needs to be specific about the kind of culture and mindset that it is looking for within firms so that it can treat firms that are looking for the right answer but have not yet found it differently from firms that are not interested in improving consumer outcomes. The FCA's model for customers in vulnerable circumstances, where it expects monitoring outcomes, analysing and learning from experience and testing and improving propositions as a result of the learning is a good basis for this and should be given more prominence in the guidance.
“Finally, there is a danger that because price is easy to measure and value is more subjective, the FCA will take the path of least resistance and focus on price. This approach is likely to lead consumers and SMEs to buy less suitable products and be less informed about all the risks they take. A focus on price at the expense of value will undermine the objectives of the Consumer Duty, and all stakeholders involved in financial services, including the regulators, have a duty to know the value of everything as well as the price of everything.”
Authored by the Chartered Insurance Institute
The Chartered Insurance Institute (CII), the leading professional body for the global financial services profession, exists to promote higher standards of integrity, technical competence and business capability.
With over 115,000 members in more than 150 countries, the CII is the world's largest professional body dedicated to insurance and financial services.
Our membership covers all disciplines within the insurance industry (claims, broking, underwriting), those working in the life and pensions sector, the mortgage advice market and financial advisers (under the Personal Finance Society brand).
Our Royal Charter requires us "to secure and justify the confidence of the public" in our members and in the insurance and financial services sector.
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