Context
The FCA has published a web page titled ‘Redress liabilities: an update for firms’ about what firms should and should not do to tackle polluting behaviour and meet their redress liabilities.
Polluter behaviour occurs when a firm or individual takes steps that leave behind potential or actual redress liabilities generated in the course of their regulated activities. Although more directly aimed at financial advice businesses, there are messages within the information on the web page that is relevant to all firms.
Key points to note and next actions
‘Polluter behaviour’ is especially damaging for retail consumers who are unable to seek appropriate redress from the firm whose actions caused them loss. Consumers become reliant on the FSCS (where available), which often means they may not receive the full amount owed. It undermines trust in the financial system and the reputation of the industry. Another other impact is the rising cost of the FSCS levy, which impacts firms across the market. Polluter behaviour means the entire industry pays for the poor conduct of a small group of firms and that’s not fair on those firms that do play by the rules
- Under the heading ‘Why the polluter should pay’ the FCA sets out its expectations of what firms should and should not do, many of which can be applied to firms which maybe in an organised wind down rather than attempting to avoid redress liabilities.
- Under the heading ‘What to expect from the FCA if you are in this situation’, the FCA reminds firms that, under the Consumer Duty, they must act in good faith, avoid causing foreseeable harm, and enable and support retail customers to pursue their financial objectives.
The FCA sets out examples of actions it might take, including commentary on requests to take further action; taking responsibility for advice, products and services; Voluntary Requirements (VREQs); and firms selling client banks.