Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether his Department has made an assessment of the adequacy of the degree to which consumer interests are weighted in the governance of the Financial Conduct Authority; and if he will make a statement.

Section 29 of the Financial Services Act 2021 required the Financial Conduct Authority (FCA) to consult on whether it should make rules giving regulated financial service providers a duty of care over their customers. The Act also set out that the consultation must include “whether the FCA should make other provision in general rules about the level of care that must be provided to consumers by authorised persons, either instead of or in addition to a duty of care”. The Act further set out that the consultation must be carried out by the end of 2021, and any new rules introduced, if considered appropriate, before 1 August 2022.

The FCA published a final Policy Statement on 27 July 2022 on its new Consumer Duty following two consultations in May and December 2021. The FCA has publicly set out how it considers it has met the requirements under the Financial Services Act 2021, including the requirement to consult on the introduction of a duty of care for financial services firms, and why the Consumer Duty amounts to a duty of care.

As the FCA is an operationally independent regulator, it would not be appropriate for the government to comment on the specific rules introduced by the FCA.

The FCA must operate within the framework of statutory duties and powers agreed by Parliament and is fully accountable to Parliament for how it discharges its statutory functions.

The Government has given the FCA a statutory objective to protect consumers. The FCA is required to set out how it has advanced its objectives, including the consumer protection objective, as part of public consultations on draft rules. It is also required to set out how it has advanced its consumer protection objective as part of its annual report which is laid before Parliament.