UK Finance has said it still has concerns about the Financial Conduct Authority’s (FCA) proposed new Consumer Duty, after the organisation expressed reservations over initial proposals published by the regulator last year.

In July, following the authority’s first consultation on the Duty, UK Finance expressed “major concerns” that its proposals were unclear about the products and services to which the Duty would apply, the harms the Duty was intended to address, and the steps firms were expected to take to prevent their occurring.

Daniel Wraith, manager – strategic policy at UK Finance, said that while the trade association supports a recent revision of the proposals by the regulator – which it believes are less risky – it still has concerns about the Duty.

“We nonetheless still have reservations about the Duty’s proposed application to firms’ back books, the role of the Financial Ombudsman Service (FOS) and a lack of proportionality in how firms will be able to evidence their compliance with the four desired outcomes,” wrote Wraith on Wednesday.

UK Finance says that even with the improved proposals, such a huge rewiring of conduct regulation – which will span the provision of all regulated financial products and services to retail customers – will be a “significant undertaking for firms and not without risks for consumers”.

It is particularly concerned by what it describes as the subjectivity of certain key terms within the proposals, such as “good faith”, “foreseeable harm”, and “value”, which it said could lead to the Duty being roll-out inconsistently across organisations.

The FCA has proposed to give FSIs nine months to get to grips with its finalised requirements, assess their full suite of products and services against them, and undertake change programmes, as well as changes to governance processes and IT systems that underpin them, according to UK Finance. But the trade organisation, which represents around 300 financial services institutions in the UK, does not believe this is enough time for firms, warning that potential risks would be exacerbated if the implementation of the Duty is rushed.

It suggested at least two years are needed for all parties, including the FCA, to be ready for the roll-out.

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