E: Country What are the powers? When can the powers be exercised? of products Wholesale / Retail In order for the CFPB to exercise the rule making powers, the United The Consumer Financial Protection Bureau Credit, deposit products Retail targeted action must be and States (CFPB) has power to intervene where ‘unfair’ ‘abusive’. and residential conduct or practices are deceptive mortgages. ‘unfair, For an action to be there must be a reasonable ‘unfair’, or abusive’. This can involve administrative basis to conclude that the act or conduct being addressed is action through cease and desist orders and likely to cause substantial injury to consumers, which is not legislative action through rule-making reasonably avoidable by consumers. powers. For an action to be the target act or practice must ‘abusive’, materially interfere with the ability of a consumer to understand the terms and conditions of a financial product or service or takes unreasonable advantage of a lack of understanding on behalf of the consumer. United The Financial Conduct Authority (FCA) is The FCA is empowered to make rules to advance the FCA’s: Full range of products Both wholesale Kingdom empowered to make rules following regulated by the FCA. and retail consumer objective (securing an appropriate level of consultation about a wide range of matters This includes protection for consumers); including to ban products or practices. The investment products, competition objective (promoting effective competition in the FCA is also empowered to make temporary insurance products and interests of consumers); or product intervention rules (without credit / hire-purchase consultation) that prohibit specified persons integrity objective (protecting and enhancing the integrity of contracts. from undertaking certain actions (for the UK financial system) if directed by the Treasury. example, selling the product to a class of The FCA has indicated via Policy Statement that it will consider persons). The prohibitions can be a temporary product intervention rule where it identifies a risk of contingent on the specified person taking consumer detriment arising from a particular product, type of other actions (for example, restricting product, or practices associated with a particular product or type certain product features). of product (PS13/3). In addition to the risk of consumer The temporary product intervention rules detriment, the FCA has indicated that it will take into are lapse after 12 months. During this consideration whether the rules are: period the FCA consults on and makes an appropriate and effective means of addressing actual or permanent rules. potential consumer detriment;
E: Country What are the powers? When can the powers be exercised? of products Wholesale / Retail United States The Consumer Financial Protection Bureau (CFPB) has power to intervene where conduct or practices are ‘unfair, deceptive or abusive’. This can involve administrative action through cease and desist orders and legislative action through rule-making powers. In order for the CFPB to exercise the rule making powers, the targeted action must be ‘unfair’ and ‘abusive’. For an action to be ‘unfair’, there must be a reasonable basis to conclude that the act or conduct being addressed is likely to cause substantial injury to consumers, which is not reasonably avoidable by consumers. For an action to be ‘abusive’, the target act or practice must materially interfere with the ability of a consumer to understand the terms and conditions of a financial product or service or takes unreasonable advantage of a lack of understanding on behalf of the consumer. Credit, deposit products and residential mortgages. Retail United Kingdom The Financial Conduct Authority (FCA) is empowered to make rules following consultation about a wide range of matters including to ban products or practices. The FCA is also empowered to make temporary product intervention rules (without consultation) that prohibit specified persons from undertaking certain actions (for example, selling the product to a class of persons). The prohibitions can be contingent on the specified person taking other actions (for example, restricting certain product features). The temporary product intervention rules are lapse after 12 months. During this period the FCA consults on and makes permanent rules. The FCA is empowered to make rules to advance the FCA’s: consumer objective (securing an appropriate level of protection for consumers); competition objective (promoting effective competition in the interests of consumers); or integrity objective (protecting and enhancing the integrity of the UK financial system) if directed by the Treasury. The FCA has indicated via Policy Statement that it will consider a temporary product intervention rule where it identifies a risk of consumer detriment arising from a particular product, type of product, or practices associated with a particular product or type of product (PS13/3). In addition to the risk of consumer detriment, the FCA has indicated that it will take into consideration whether the rules are: an appropriate and effective means of addressing actual or potential consumer detriment; Full range of products regulated by the FCA. This includes investment products, insurance products and credit / hire-purchase contracts. Both wholesale and retail
C2016-054_Design-and-distribution-obligations.docx