The Financial Conduct Authority (FCA) in the United Kingdom is considering reducing the regulatory burden on firms by removing the “need for a Consumer Duty Board Champion” and delaying the introduction of new consumer protection rules if they are already addressed under the existing duty.
The British regulator's plans were disclosed in a letter from its CEO, Nikhil Rathi, to the UK’s Prime Minister, Chancellor, and Secretary of State, which was made public last week. The letter highlighted the FCA’s intentions to cut several bureaucratic obstacles.
Mandatory Consumer Duty Rules
The Consumer Duty rules came into effect at the end of July last year, covering the broader financial services sector in the UK and targeting services offered to retail customers. These regulations also directly affected the trading industry, including forex and contracts for differences (CFDs) brokers.
However, the mandatory Duty rules have placed a substantial financial burden on companies. According to Reuters, firms incurred an estimated one-time cost of GBP 2.4 billion ($3.1 billion) to implement the Consumer Duty rules, along with increased operational expenses.
An FCA license is regarded as one of the most stringent for any CFD broker. While a few years ago, such brokers could operate across the European Economic Area by passporting a single license, this provision ended with Brexit's finalization.
Recently, the FCA revealed that none of the 100 EU-based CFD brokers that opted for temporary permission after Brexit pursued permanent authorization.
Boosting Growth Is the Priority
The FCA’s priority now is to ease companies' financial burdens.
“We could go even further and, with Government support, reduce costs of anti-money laundering measures, relaxing know-your-customer requirements on small transactions,” the letter stated.
The letter further outlined that the British watchdog’s primary strategy until 2030 is to promote growth.
“We already had significant work in progress for this year, which I set out below, along with new proposals that go further,” the letter added. “We have listed ideas to test with you and through wider consultation, which we would conduct as quickly as possible, including with our statutory panels. This will be supported by academic research we have commissioned to better understand the links between financial regulation and growth.”
