The regulator’s consultation centred on whether it delivers the necessary level of consumer protection and achieves the right balance between firm and consumer responsibilities. It also considered how greater protection could be provided, including introducing a formal duty of care to financial services firms.
The majority of respondents suggested that levels of harm to consumers are high and there is a need for change to protect them better.
The FCA said it would review how it applies its regulatory framework. In particular, it would examine its application of principles in its authorisations, supervisory and enforcement functions, and how transparently it communicates with firms.
It would also look at new or revised principles to strengthen and clarify firms’ duties to consumers.
However, StepChange said that while the FCA’s response is welcome, it does not prevent consumer harm in the meantime.
In its feedback, the charity said that while progress with long-standing problems such as overdraft charges, credit card debt, and the high-cost credit market has been made, these have all been reactive rather than proactive responses.
Peter Tutton, head of policy at StepChange Debt Charity, said: “We consistently see the harm that financial products like credit can cause. For us, a ‘duty of care’ is about ensuring firms do all they can to design problems out and build fair treatment into everything they do. It is about ensuring firms never take advantage of consumer vulnerabilities, biases or constrained choice.
“So, while we recognise the FCA’s commitment to review how its principles and the way they are applied are meeting these outcomes, we are disappointed that this consultation has not arrived at more concrete steps forward.
“The enduring nature of these problems highlights the gap between the fair and consumer-focused market we want to see, and a financial services culture that has not yet delivered this.”
Andrew Bailey, chief executive of the FCA, said: “Given their long-lasting impact, we now want to weigh-up possible changes, including whether reworking our principles of business is the right way forward. I will continue to push this forward as getting the right answer on this question is essential to the FCA delivering on its mission.”
The FCA will publish a further paper in autumn 2019 seeking detailed views on specific options for change.