Global menu

Our global pages


Financial Services (Duty of Care) Bill

Financial Services (Duty of Care) Bill
  • United Kingdom
  • Financial services and markets regulation



For many years the FCA has considered whether to apply an overarching standard of care that should be applied to authorised firms. In July 2018 they concluded that there was not “a sufficient basis for making changes to primary legislation”, so what is the Financial Services (Duty of Care) Bill?1

Background – previous FCA initiatives

In October 2016 the FCA published a document entitled “Our Mission 20172” introducing the possibility that a new overarching Duty of Care might be introduced. This was followed in July 2018 with a Discussion Paper3 and then a Feedback Statement4  in July 2018.

The FCA revealed that stakeholders had presented a variety of views arguing for and against a statutory duty of care and whether any duty (statutory or otherwise) should be actionable by consumers. In the round, the FCA seemed to be concluding that there was not “a sufficient basis for making changes to primary legislation” although they left their options open.

The FCA would instead focus on using the powers already at its disposal to improve the regulatory framework – reviewing the application of the FCA’s Principles for Business and any additions/revisions to those Principles, and considering the options that “are likely to be the most effective and proportionate”.

The Feedback Statement was intended to be followed by a further consultation in Autumn 2019. Although that did not transpire, we understand that a consultation is still planned, following a speech by Christopher Woolard, Executive Director of Strategy and Competition at the FCA5  in October.

Following all of this, the introduction into Parliament of the Financial Services (Duty of Care) Bill has come as quite a curveball.

The current Bill

It is, in fact, a private members bill – that is, a proposed piece of legislation introduced by a member of Parliament who is not part of the Government. In this case, it is Lord Sharkey of the House of Lords. The Bill was originally introduced into Parliament on 29 October 2019, but it ‘fell’ (was discontinued) upon the dissolution of Parliament prior to the 2019 General Election.

This is therefore an independent political intervention into the financial services arena.

The Bill, in its current form, through an amendment to the Financial Services and Markets Act 2000 requires the FCA to introduce “a duty of care owed by authorised persons to consumers in carrying out regulated activities” within 6 months of the date that it is passed.

In this context, ‘duty of care’ means an obligation to exercise reasonable care and skill when providing a product or service, and ‘consumer’ follows the meaning given in the Consumer Right Act 2015 (not, for example, the retail investor definition under MiFID).

Apart from potentially giving the FCA an obligation it didn’t ask for, and causing some hair-splitting around the meaning of ‘consumer’, there is a legitimate question about whether this proposed legislation will substantively change anything. A duty of care prescribed in these terms barely moves the dial. There are already, for example, particular duties on authorised fund managers and other firms to act in the best interests of clients, and these have been added to by the new rules, which came into force in September 2019 following the Asset Management Market Study. The Consumer Rights Act already includes an implied contractual term that a service be performed with reasonable skill and care (Section 49), and FCA Principle 2 requires a firm to “conduct its business with due skill, care and diligence”. Together firms therefore have a regulatory duty and a duty actionable by customers. It will be interesting, as the bill is debated, to understand what is expected to change.

The Bill’s first reading was on 9 January 2020 with a second reading (the general debate) yet to be scheduled. We will be watching the proceedings with some interest.

How Eversheds Sutherland can help

If you would like to discuss the statutory or regulatory obligations on your firm or the FCA’s approach to supervising firms, please do contact us.


[1] Financial Services (Duty of Care) Bill 2020.

[2]Our Mission 2017: How we regulate financial services”, FCA, 26 October 2016

[3] “DP18/5: Discussion Paper on a duty of care and potential alternative approaches”, FCA, July 2018

[4] “FS19/2: A duty of care and potential alternative approaches: summary of responses and next steps”, FCA, April 2019

[5] “Regulation in a changing world”, Christopher Woolard, 21 October 2019