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The Consumer Duty and fiduciary relationships

Section 3B of the Financial Services and Markets Act (FSMA) 2000 sets eight regulatory principles to which the FCA are required to have regard when making rules, guidance and general policies. One of these is the general principle that consumers should take responsibility for their decisions.[1]

As such, the Consumer Duty DOES NOT require firms to protect their customers from risk they understood and accepted.[2]

Similarly, the Consumer Duty and the new Principle 12 DOES NOT change the nature of a firm’s relationship with its customers. For example, it DOES NOT create a fiduciary relationship where one would not otherwise exist, nor require a firm to carry out any regulated activity (for example provide advice) where it would not otherwise have done so.[3]

Next time

Next time, we’ll be turning our attention to look at the obligations that are placed on boards under the Consumer Duty, so stay tuned!

[1] PRIN 2A.1.9G

[2] Policy Statement PS22/9, 4.7

[3] FG22/5, 4.12; PRIN 2A.1.11G