Enforcing the Duty by an assertive regulator

The new Consumer Duty is the FCA’s flagship initiative, setting out its expectations of the industry over the upcoming years. The FCA has made clear that it will have a key role in successfully embedding the Duty, by making it central to its Supervision, Authorisation and Enforcement strategies. With early intervention and the prevention of harm a priority, we would expect to see even more use of the FCA’s requirement or variation of permission powers to manage risks or to stop potential future harm.

Deterrence is a key part of the FCA strategy and unsurprisingly the FCA has stressed that it will exercise its investigatory, enforcement and remediation powers where it identifies serious misconduct. We would expect the FCA to be seeking to line up enforcement action against firms of all sizes after the end of the implementation period. These would include the most egregious cases, which may already be capable of FCA enforcement. However, the FCA will likely want to go further - taking on challenging cases where good outcomes have not been achieved, notwithstanding compliance with the existing rules. We also wait to see whether the FCA takes enforcement action for early failures in governance or design, which may not yet have resulted in poor outcomes for customers.