FCA scraps Consumer Duty Board Champion requirement as it vows to slow ‘pace of regulatory change’

In a speech delivered at the Association of British Insurers (ABI) roundtable on 27 February, FCA CEO Nikhil Rathi referred to the challenge of boosting UK economic growth as the ‘Gordian knot’. To 'cut the Gordian knot' is to 'solve or remove a problem in a direct or forceful way, rejecting gentler or more indirect methods’, emphasising that the FCA are ‘willing to be bold’ in its approach as it looks to cut regulatory burdens and drive growth.

It comes after a period of increased pressure on the FCA by the UK government to demonstrate support for its growth agenda. However, during the speech, Rathi emphasised the pace at which the regulator was moving, noting that people "may be surprised in the coming weeks at the pace we will move on the 50 or so growth proposals we made to the Prime Minister”.

Addressing concerns about the pace of regulatory change, however, Rathi noted that the FCA were “aiming for fewer large-scale changes in our next 5-year strategy” but asserted that it would continue to reduce the regulatory burden on firms where possible: “We want to streamline our work. End duplication.”.

The speech specifically referred to the insurance industry’s engagement with, and response to, relevant papers, such as the Call for Input on simplifying the FCA Handbook to align with Consumer Duty regulation.

Confirming that the regulator is assessing feedback from the Call to Input, including concerns raised such as the frequency of assessing fair value, Rathi noted that the regulator is “looking hard at reporting requirements – disclosures, training and competency rules, review cycles, product-specific rules, and the scope of international rules”, and “where [the regulator] can simplify, [it] will.

Also announced during the speech, was that the expectation for firms to have a Consumer Duty Board Champion would be scrapped. 

Whilst this affords firms choice in whether to delegate this role, it does not reduce the requirement for firms to discuss Consumer Duty performance and MI at the higher levels of the business, nor the need for scrutinisation and challenge of the annual Consumer Duty Board Report by a firm’s Board. Moreover, senior managers will still be required to ensure procedures are implemented to manage, fulfil and monitor a firm’s Consumer Duty obligations.

In this sense, the change does not alleviate a significant regulatory burden, especially as most firms are likely to have delegated this role already.

Rathi also referred to insurance as being the “subject of a significant number of campaigns focused on the treatment and value people received”, reiterating that there is ‘still more work to do’ surrounding product oversight and governance.