Guest post from the Financial Conduct Authority: protecting customers

In this guest post, Christopher Woolard, Executive Director for Strategy and Competition at the Financial Conduct Authority (FCA) explains the work the regulator is doing to protect customers.

Financial services and products are important for all of us. They help provide the money we need to buy or furnish our homes, invest and save for our future, and protect our families and belongings in case things go wrong.

However, we know that there will be times in people’s lives when they find it particularly hard to deal with their finances. Losing a job, the death of a loved one or health problems can all make people vulnerable. Vulnerability is not always a permanent state and these types of issues can affect people at any time. Some people may also find it more difficult to navigate the market and find the right product for them.

Our Mission, published in April, sets out a framework which underpins our decision-making. It states that our Mission is ultimately to serve the public interest and explains that we will act where we can add the greatest value and have the greatest impact. In particular, we focus on harm and how to prevent it.

Building on our Mission, in November we published a document called ‘Our Future Approach to Consumers’ which explores how we will work for consumers in practice. It sets out our initial views on what good looks for everyone who buys financial services and aims to clearly explain how we will work to understand the problems that some people may experience and how we can work to put them right.

To better understand the experiences of different consumers, we have carried out extensive research, including our recently published Financial Lives survey of close to 13,000 UK adults. We know from this survey that there are a significant number of potentially vulnerable consumers in financial services markets. 50% of UK adults (25.6 million) display one or more characteristics that signal potential vulnerability. These people may be at increased risk of harm or would suffer disproportionately if things go wrong.

We also know from our survey that some people have very little understanding of financial matters – 17% of UK adults deem their own financial capability as particularly low.

Our vision is for well-functioning markets that benefit everyone. In our vision, consumers will able to buy the products and services they need because the environment in which they are sold is clear, fair and not misleading. There will be high quality and good value products and services that meet their needs. All consumers will be able to access the financial products they need and the needs of vulnerable consumers are taken into account and all consumers will be appropriately protected from harm.

Our Future Approach to Consumers paper sets out our framework for achieving this vision. We will regulate for all customers, designing remedies based on how people really behave rather than how the text books say they should. We will prioritise vulnerable and excluded consumers, particularly those who are least able to cope, we will support innovation and ensure we consider the needs of those who may be negatively affected by change.

Our vision is aspirational and we cannot do this on our own. In early December we held a conference to engage with people from across the financial services industry, groups that represent consumers, like the Money Advice Trust, as well as charities and government. This provided an opportunity to come together and discuss a number of key issues raised by our paper, such as vulnerability, financial inclusion and consumer responsibility.

We are delighted that both Joanna Elson, Chief Executive of the Money Advice Trust, and Chris Fitch, the Trust’s Vulnerability Lead, were able to speak at our event and welcomed our Future Approach to Consumers but also provided some thoughtful and constructive challenges for us to take away and consider as part of our consultation.

The publication of our Approach and our conference are just the start of a dialogue about how we can all work together to make sure that the market really does work for everyone.

This is an open consultation and it is crucial to us that we give all our stakeholders the chance to feed back their views and that we have the chance to consider them. I urge you to visit our website and let us know what you think about our approach to protecting customers.

The FCA’s Future Approach to Consumers consultation is open until 5th February 2018. Further information about the consultation, including details of how to respond can be found here.

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