The FCA wants to update its Financial Crime Guide to ensure the Consumer Duty requirements are embedded to improve financial crime deterrence.

The changes may require regulated firms to do more to combat fraud.

The watchdog said it aims to, “make clear that firms should consider whether their systems and controls are proportionate and consistent with their obligations under the Duty.”

The regulator has outlined the changes in a new consultation paper - CP24/9: Financial Crime Guide update. The FCA says bringing together the two requirements under the Financial Crime Guide and Consumer Duty makes sense.

The FCA is considering whether to require firms to consider financial crime risks when advising clients and whether firms should add text to documents outlining their financial crime fighting systems.

The regulator will consult on the proposals until 27 June and later decided whether to implement them.

Among the proposed requirements for regulated firms:

• Firms should consider whether their financial crime systems and controls are consistent with their obligations under the Consumer Duty.

• Firms may wish to consider additional steps in their customer journeys to help prevent fraud.

• Firms may also be required to offer "additional consumer support", such as: ‘a real-time human interface’ to deal with security or fraud concerns

• Engage with customers during customer due diligence processes.

The watchdog says that consumer protection and good financial crime systems and controls can directly protect consumers and their money.

Firms need “proportionate” financial crime systems and controls, reflective of their business, it says.

The FCA added that all firms should also take into account whether their systems and controls were consistent with the Consumer Duty.

The Consumer Duty was introduced 31 July 2023 for new and existing products and will be extended on 31 July for closed products and services.

Under the Duty firms must act to deliver good outcomes for retail customers at all times and the FCA says it is proposing to include text that reminds firms that, where relevant, the Duty must be considered alongside financial crime obligations.

• Details in Read CP24/9 (PDF)