UK Finance and Association for Financial Markets in Europe (AFME) welcome the opportunity to respond to the Financial Conduct Authority (FCA’s consultation) on the scope and proportionality of the Consumer Duty. Members support the FCA’s objective of providing greater clarity around the Duty’s application to wholesale firms and ensuring that it is applied proportionately, and welcome its continued engagement with industry on these matters.

 

Our response highlights a number of areas where we believe the current proposals could inadvertently introduce additional complexity or broaden the scope of the Duty, and could therefore be refined to deliver a clearer, more proportionate and workable framework. In particular, we call for greater clarity around the territorial scope of the Duty, the proposed approach to Retail Market Business and the application of the material influence test.

 

We also highlight the need to avoid unnecessary complexity in relation to distribution chains and manufacturing arrangements, and for the Duty to operate coherently alongside existing sectoral requirements, including PROD 3. Appropriate transitional arrangements and further FCA guidance will also be important to support effective implementation.

 

Please note that the UK Finance payments team have also submitted a separate response to the consultation.