Is UK Banking Broken - and the FCA's Duty of Care Backfiring?

One thing is for certain - something damaging and unsavoury is now happening in the UK banking system... and there's no transparency!

• Business funds frozen needlessly (and unfrozen eventually, after much trouble and fuss)
• Accounts suspended
• Ordinary, unobjectionable, payments stopped - suddenly questioned as risky after months or years of paying a mortgage or for ordinary services, such as email hosting
• Payments going missing - taking a week or more before they either bounce or are pronounced as MIA (missing-in-action)

I Drop this Bomb - You Clean it Up...

All on the basis of: I drop this bomb - you clean it up! "It's for your own protection".

This bullying approach seem to be happening across the economy - except to large corporates who have the heft to push back I suspect.

Endangering countless business, especially small business who can't afford to have their funds needlessly frozen, or their already precarious finances disrupted or entirely wrecked by missed payments and the snowball effects these unaccountable actions create.

The FCA has described the new Consumer Duty as a "major shift" in the UK financial services regulatory landscape.

This approach has been gathering pace over the last few years, since I first saw it deployed against Fintech companies to limit their encroachment onto the territory of the incumbents - under cover of global AML (Anti-Money Laundering) and KYC (Know your customer rules), which have effectively been used to limit Fintech and first cripple and now progressively squeeze out new payments and crypto players, to the benefit of incumbents.

Has the FCAs new 'Consumer Duty of Care' Backfired?

The FCA's new 'Consumer Duty of Care' has been in place for exactly one month today - and it seems that we are now feeling the effects... and they are NOT the ones intended.

The 'Consumer Duty of Care' makes bank staff responsible for their decisions. This is not, perhaps surprisingly, something they signed up for.

So perhaps it's unsurprising if, in the grip of fear (in not a little paranoia) they are now shooting from the hip? Questioning everything. Shutting everything down that is not clear and obviously someone else's responsibility, as 'risky' until proven otherwise.

This is not all that surprising given the bullying, compliance, culture that exists between the FCA and banks... and now bankers. Who wouldn't be scared when they have no way of knowing how the new rules will be applied. When they're waiting for the other-shoe-to-drop: The first case of a banker being jailed for breaching these rules?

So, ironic as this is, the bullying is now reaching out to us. Individuals included, but especially SME and micro businesses.

The effects of the new rules are especially damaging where any payment passes into or out of what is increasingly looking like 'Little Britain' with a Brexit 2.0 fully pulling up the drawbridge.With long established means of taking internet payments for services being affected.

When it's all but impossible to set up an new bank account or use Paypal or Stripe with with a bank account to cash out then how are new UK web businesses going to be able to open and existing ones continue to trade?

"We are in a world where we are putting more grit into the system," FCA CEO Nikhil Rathi,

Grit in the System?

The FCA's CEO Nikhil Rathi, who has previously spoken of 'Putting more grit into the system, came to the FCA from running the rough and tumble of the London Stock Exchange. Dealing with the major players and corporates who can be expected to deploy every trick in the book, grab every advantage, fair, unfair or downright ruthless.

There have been question as to whether he was the right man for the job at the FCA from day one.

Perhaps the thinking that having a financial BullyXL in charge of creating a 'Consumer Duty of Care' would be a safe thing to do?

Whatever the thinking it's starting to look like this has backfired?

The National Audit Office have been investigating the FCA for months now, and it's still dragging on. With no apparent progress, transparency or change as a result. Presumably as there's the now-usual game playing going on in the background.

Is the government quietly at war with the FCA? On the face of it they seem to be pulling in opposite directions where Fintech is concerned, driving innovators and the innovative businesses we need to lead elsewhere.

Has the 'Consumer Duty of Care' been so badly handled that it's backfiring - now threatening to pour 'grit into the wheels' of the UK economy.

What's certain is that there are some urgent questions to be answered, and some transparency and accountability now needed as the 'Consumer Duty of Care' seems to have created the opposite so far: No accountability for arbitrary, damaging, actions, under cover of that very duty of care and with the excuse that it 'for your protection'.

PS See also the poll here!