Chancellor says Consumer Duty impact ‘under review’

Chancellor Rachel Reeves has said that the impact of the Consumer Duty, introduced by the FCA in 2023, is “under review.”

In an unexpected announcement at her Mansion House speech this evening (15 July), the Chancellor said a review of the consumer protection measures was needed.

She has asked the FCA to carry out a review of the regulations.

She said: “I am introducing new targets for the FCA and PRA to cut times for authorisations and approvals and I have tasked the FCA with assessing the impact of the Consumer Duty and whether it unduly effects wholesale activity to ensure that regulators are really regulating for growth.”

The Chancellor’s words suggest that she has listened to critics who say that the sweeping measures in the Consumer Duty have potentially restricted the availability of financial advice by making it more expensive.

Many Financial Planners have said they are now focusing on clients with higher net worth because they have had to increase their fees.

In recent times the FCA has tried to soften some of the measures in the Consumer Duty by, for example, dropping the requirement for a ‘Consumer Duty Champion’ on the boards of regulated firms.

It is unclear yet what the review might mean but it it is expected the FCA or the Treasury will clarify the Chancellor’s intentions in the near future.

The review is likely to look at how the Consumer Duty has affected competition and growth in the financial services sector.

In her Mansion House speech the Chancellor made clear that she expected financial services to be a major engine for growth in the economy and she has already given the FCA a growth agenda which the FCA is responding to by trying to cut back on red tape and unnecessary data requirements from regulated firms.