UK FCA drops proposals on capital deduction for redress by personal investment firms

The UK Financial Conduct Authority (FCA) has published an updated webpage confirming that following the closure of its consultation on capital deductions for redress (CP23/24), it will not proceed with the proposed capital deduction for redress framework. This decision reflects a realignment of regulatory priorities in light of broader changes affecting the advice market. The FCA expects firms to continue addressing redress liabilities under existing rules, including the consumer duty, and warns that it may intervene where firms fail to meet these expectations or pose a risk of harm. Supervisory focus will include provisions for redress liabilities in client book transfers and challenging firms at the gateway, with firms expected to adhere to the FCA's "polluter pays" principle as outlined in its prior communications.

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