At the heart of the proposals lies for companies to take more responsibility to assess the value of potential claims in advance and ensure they have the capital should those claims materialise.
Keith Richards, the former chief executive of the Personal Finance Society, who now heads up the Consumer Duty Alliance, recently told FT Adviser the new measures, though a “sensible thing to do”, did not fully address the bad companies issue, which has seen the Financial Services Compensation Scheme levy soar.
Instead, he says the fines the FCA collects from the industry should be reinvested back into the industry.
“I think all those sort of things are sensible, but really and truly ... the vast majority of firms it won't impact because the vast majority of small firms that have got a relatively small client bank don't get claims against them,” he says.
“What it will do for the good, genuine firms is it will protect their interests and the interests of their clients.”
Gunner & Co managing director Louise Jeffreys agrees that highly compliant businesses should have nothing to worry about, but she warns it is essential “not all businesses are tarred with the same brush”.
“Poorly applied, 2024 could be remembered as the beginning of the end for IFA consolidation,” she says, as it would require companies to leave money in the bank after they have sold.
Another big piece of regulation, which will come into force in 2024, is the FCA’s new sustainability regime.
Its anti-greenwashing rules for all authorised companies, which dictate that sustainability-related claims must be fair, clear and not misleading, becomes effective in May, while firms will be able to use the investment labels from July 31. The naming and marketing rules for asset managers come into effect in December.
Investment Association chief executive Chris Cummings says smooth implementation of the rules would be a key focus for investment trade bodies in the new year.
Association of Investment Companies research director Nick Britton adds that the regime had come at a good time as the body’s own research found a lack of trust in the sustainability claims of funds.
He tells FT Adviser that he expects to “hear a lot more about this in 2024”, as asset managers and investment companies get to grips with the requirements, warning “those who have been more creative about their sustainability credentials will need to clean up their act, as this looks like a robust and rigorous regime”.
Finally, 2024 will see the next instalment of the consumer duty regime, this time encompassing closed products and services.
