We have identified some areas of law that our experience and discussion with stakeholders suggest may require reform. They could be potential projects for the Programme. We would like to hear your views about these, and whether you think they should form part of our work over the next few years.

Banks’ duties to customers

Should banks’ duties to customers be reviewed?

Under Financial Conduct Authority principles, banks must “pay due regard to the interests of its customers and treat them fairly”. Banks must also comply with the FCA’s detailed rules and guidance. The Financial Services Consumer Panel has argued that this regime “does not protect customers of financial services as it should.” The concern is that the principle of fair treatment may be too vague to be implemented but, on the other hand, the FCA rules and guidance are too detailed. It has been suggested that the current regulatory approach may encourage senior management to delegate issues of fair treatment to compliance officers. This imposes a significant regulatory burden. At the same time it could also lead to a focus on ticking the boxes of regulatory detail rather than the bank’s wider responsibilities.

The Panel has called for a stronger duty of care towards customers intended to resonate with senior managers and help embed fairness as part of the culture.

What do you think?

We are interested in hearing whether this is a matter which the Law Commission might usefully look at. A preliminary point is whether this is an area in which the law can make a difference.  If it is, should the banks’ duties be reviewed and restated to make them more effective? And could this also help reduce the burden and scope of overly detailed regulation?

Please use this form to send us your comments, and email it to programme@lawcommission.gsi.gov.uk.


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