We’ve recently responded to two consultations on the future shape of the financial services market:
- HM Treasury’s Future Regulatory Framework Review which proposes how the financial services regulatory framework should adapt to be fit for the future
- The FCA’s consultation on introducing a new Consumer Duty for financial services providers so they provide a better standard of care for their customers
We’re supportive of the direction of both measures, which taken together should lead to more innovation and protection for consumers.
However, we believe more needs to be done to build a fairer financial system that puts financial inclusion at the core of firms’ responsibilities. We want to see regulation that addresses the current market failure for excluded customers and people in vulnerable circumstances, where:
- 1 in 4 households in the UK have no insurance at all
- One in five adults has less than £100 in savings
- 8m people are ‘invisible’ to the credit referencing system
And in the consumer credit market in particular we estimate around 11m people struggle to access affordable credit, with many lenders who serve this customer group scaling back provision or exiting the market altogether.
Our responses set out how regulation can better support a sustainable market that serves everyone, including customers with low incomes or low financial resilience
- Under the new regulatory framework we would like to see the FCA given a statutory responsibility for financial inclusion, to ensure it is considered across all of the regulator’s work. We also call for a stronger consumer voice in the policymaking process, particularly from people in vulnerable circumstances
- While the Consumer Duty will raise standards for many customers who are already served by financial services, we believe it needs to be accompanied by more proactive activity from the regulator to increase the provision of products and services to excluded customers
Overall we want to see a financial services sector that provides more people in vulnerable circumstances with products and services that meet their needs, build their financial resilience and allow them to play a full part in their communities.
Read our full responses: