The Financial Conduct Authority (FCA) will reduce some of the burden that has been imposed by its ‘Consumer Duty’ regulations.
These went into play in 2023 and the goal – often ill-defined – was to give ‘better outcomes’ to retail clients.
This has meant investing huge amounts of money in for brokers that want to make sure they are compliant.
For example, firms have to be able to make sure a CFD is appropriate for the client that wants to trade it. They also have to a do a lot of record keeping to show that has been done properly.
As Options Desk Founder James Proudlock told us in 2023, the bulk of the investment his firm had to make before going live was not in technology but in ensuring they could have all the paperwork documented to ‘prove’ they hadn’t done anything wrong.
The changes to Consumer Duty that the FCA has proposed would mean removing having a ‘Consumer Duty Board Champion’. The regulator also said that future consultations on consumer protection will seek to first determine if Consumer Duty rules are already sufficient.
Although these changes are likely to be welcome, the regulations remain extremely burdensome. It’s plausible the FCA will be pushed to make further changes as part of its mandate to deliver growth, but we here at TradeInformer are not holding our breath.