As part of its continuing Expectations Gap work the FCA issued a call for examples last year asking firms to provide examples as to when they believed the regulator had applied rules retrospectively. The FCA has now published the feedback on its call for examples.

The FCA reports that in total it received 36 responses and that the issue that was most frequently mentioned was the treatment of traded life policy investments and in particular the FSA branding them as ‘toxic’ and the consequent fall in their value. The second most-frequently mentioned issue was the Financial Ombudsman Service and the Ombudsman’s decisions. One respondent said: “The main threat of retrospection emerges from the interplay of regulatory activity in which rules laid by one body can be reinterpreted by another, notwithstanding the change in approach that it might contain.”

The FCA grouped other responses into two broad headings, “Things which have persisted for some time without comment” and “New interpretations based on new methodology”. In relation to the former heading, respondents mostly had concerns that the regulator had been aware of market practice at the time and had, at some point, decided to review past business and decided that mis-selling had occurred. In relation to the latter heading a respondent raised a question that if a new methodology, such as behavioural economics, suggested that a firm’s actions had exploited consumer behavioural biases in a way that was unfair, did it follow that it had always been unfair.

View The retrospective application of rules: feedback on the call for examples, 23 January 2015