A group of MPs have backed calls by the Financial Services Consumer Panel (FSCP) for firms to sign up to a 'fiduciary duty' under the new regulatory system.
The Financial Services Bill is currently in its committee stages, with MPs scrutinising the objectives of the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), the successors to the Financial Services Authority.
Calling for "genuine consumer protection" last year, the FSCP suggested an amendment to the Bill, saying "authorised persons should have a fiduciary duty towards the consumers who are their clients".
The amendment has now been proposed by one Social Democratic and Labour Party MP and two Labour MPs, including shadow financial secretary to the Treasury Chris Leslie, and will be debated and voted on by the committee.
A fiduciary duty would require firms to act 'in the best interests of their clients', avoid conflicts of interest, not profit at the expense of the consumer, and have undivided loyalty to the consumer and a duty of confidentiality.
Adam Phillips, FSCP chairman, said: "Given the clear failures by providers of financial services to treat their customers fairly, we believe the new act should require the industry to provide the service that consumers expect.
"The Panel believes that the new FCA should be given powers to make rules to ensure that the industry would have to take their customers' interests into account when designing products and providing advice."
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