Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of the systemic impact from the Financial Conduct Authority’s crackdown on wealth management services under the Consumer Duty; what estimate they have made of the likely total compensation that will need to be paid by wealth management firms; and what other areas of the financial sector they expect to be impacted by the Consumer Duty.

Requirements regarding financial adviser ongoing services started in 2013 following the Retail Distribution Review, with additional requirements resulting from the Markets in Financial Instruments Directive in 2018.

In February, the FCA wrote to a number of financial adviser firms requesting information about their delivery of ongoing services, for which their clients continue to be charged. The FCA is collecting this information to assess what, if any, further regulatory work it may undertake in this area.

The FCA’s new Consumer Duty seeks to set a higher and clearer standard of care that firms owe their customers. The FCA is an independent non-governmental body and is responsible for determining the application of the relevant rules. The Government will continue to monitor the effectiveness of Consumer Duty rules, as they bed in and as industry becomes more familiar with them.