The Financial Services Duty of Care Bill

On 29 October Lord Sharkey introduced a Private Members’ Bill into the House of Lords, which proposed amending the Financial Services and Markets Act 2000 (“FSMA“) to empower the FCA to introduce a duty of care owed by authorised persons to consumers in carrying out regulated activities under FSMA (the “Bill“).

The Bill proposed that a duty of care be defined as an obligation to exercise reasonable care and skill when providing a product or a service.

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Do we need a new duty of care in financial services?

On 17 July 2018, the FCA published a paper on its Approach to Consumers (the Approach), accompanied by a discussion paper DP18/5 (the DP) on the possible introduction of a new duty of care and other alternative approaches (a New Duty).

The Approach sets the FCA’s vision for well-functioning markets that work for consumers, and builds on the November 2017 consultation on its Future Approach to Consumers. The aim is to provide greater transparency on when and how the FCA will act to protect consumers, its policy positions on key issues, and its strategy for ensuring that it advances its consumer protection objective with the greatest impact. For our full briefing on the matter, please click here.

 

Jenny Stainsby
Jenny Stainsby
Partner
+44 20 7466 2995
Karen Anderson
Karen Anderson
Partner
+44 20 7466 2404
Jon Ford
Jon Ford
Senior Associate
+44 20 7466 2539

Supreme Court clarifies what is required for “identification” in respect of third party rights under s393 FSMA

In a judgment highly anticipated by firms and their senior managers as well as the regulators, the Supreme Court has overturned decisions of the Court of Appeal and Upper Tribunal, holding in FCA v Macris [2017] UKSC 19 that Achilles Macris was not identified in certain enforcement notices and therefore was not entitled to third party rights.

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UK: FCA will appeal decision to stay land banking case based on defendants’ inability to secure representation following legal aid cuts

The Court has stayed a trial of a prosecution case, brought by the FCA in respect of a land banking scheme involving an alleged £5m fraud, on the basis that, as a result of legal aid cuts, there was no realistic prospect that the defendants could secure legal representation for the trial date which had been set.  The Court described the effort put in by the defence to find trial advocates as “very substantial indeed”.  It was common ground that the five defendants could not receive a fair trial unrepresented.   Continue reading

The courts’ analysis of firms’ responsibilities under COB and COBS client classification requirements

In the years preceding the financial crisis, more and more private clients began to invest in increasingly complex and riskier financial products in the search for yield.

Following the subsequent market turmoil, those investors have sought to recover their losses from the firms by whom they were sold the products. Investors commonly claim they had not understood the complex products in which they had invested, that they were, as a recent judgment put it, “led by the nose like a lamb” into investments far too risky for financial ingénues like themselves. Continue reading