Halting Regulatory Retrospectivity: Defending Legacy Advice Against Post-Consumer Duty Claims

The template that uses today’s words

Claims-management letters now describe old transactions as sludge, or as a failure of price and value. The vocabulary is the Consumer Duty. The transaction often predates it. Firms that answer in the same vocabulary accept a standard that was not the standard.

PS22/9 brought in PRIN 2A from 31 July 2023 for new and existing products, and later for closed products. It did not require firms to re-underwrite historic acts against the new Principle. DISP 3.6.4R tells the Ombudsman to take account of regulators’ rules and good industry practice at the relevant time.

Putting the case back on its date

The reply does three things, and it does them before it discusses fairness in the round.

1. Date the act complained of.
2. Set out the COBS rule that governed that act. For most personal recommendations that is COBS 9 or COBS 9A, plus any product-specific rule such as COBS 19.
3. Decline the parts of the complaint that exist only as PRIN 2A labels for conduct before the Duty applied.

Fairness is still the Ombudsman’s test. Fairness at the relevant time is not the same as applying a 2023 outcome to a 2018 recommendation. Where the Duty does apply, because the act is after the commencement date, the reply says so and answers that part under PRIN 2A. Mixing the two is how retrospectivity gets in.

Summary

A legacy complaint is defended on the rulebook of its own day. Consumer Duty concepts are answered by dating them, not by adopting them.