City of London minister Andrew Griffith has raised concerns that the Financial Conduct Authority's Consumer Duty rules could harm the financial services industry and lead to a flurry of lawsuits, putting him at odds with the regulator.
According to a report by the Financial Times, at a recent private dinner with senior members of the industry, one insider in the sector told the newspaper that Griffith was "scathing" over the reform. Another source said he had harshly criticised the FCA's consumer protection overhaul.
Sources claimed that Griffith is concerned that Consumer Duty will place further regulatory constraints on the financial services sector just as the Treasury is attempting to reduce the regulatory burden imposed by laws inherited from the EU as part of "a Brexit opportunity".
Andrew Griffith appointed city minister to see out UK financial reforms
Ministers asked the FCA to strengthen consumer protection in its 2021 financial services act, but according to government sources, Griffith wants to avoid a "compensation culture" with frivolous lawsuits.
They continued by saying he wanted to ensure the regulator paid attention to the industry's worries and make sure the new Consumer Duty rules were proportionate and clear.
The Treasury declined to comment, the FT wrote, but it did not dispute that Griffith was concerned about the reforms and had discussed his worries with the FCA.
Citing the confidentiality of its interactions with ministers, the FCA declined to comment on any conversations it may have had with Griffith over his concerns.
FCA director urges firms to 'eat the frog' as Consumer Duty deadline looms
The FCA added that Consumer Duty would "encourage innovation while driving competition and growth in the financial services industry in the UK".
Last week, FCA director Sheldon Mills said in a speech that financial services firms that have employed "avoidance tactics" ahead of the Consumer Duty implementation deadline still have time to act before 31 July but must make inroads now.
