The Financial Conduct Authority (FCA) recently published their latest consultation titled FCA Mission – Our Future Approach to Consumers. This document follows on from the announcement of the FCA’s Mission, which promised to be the first of several documents explaining the FCA’s processes in greater depth.
What is Our Future Approach to Consumers?
As the first document in the FCA’s Mission series, Our Future Approach to Consumers looks at the way the FCA approaches regulation for retail consumers. In order to better the market, the FCA explores its current regulatory effect on the nation’s approximately 56,000 firms, and sets out goals to improve this large section of industry.
The main purpose of the Our Future Approach paper is to offer a better view of inclusion and protection. The FCA believes that all consumers should be getting appropriate, good value products and services that meet their needs and protect them from financial risk, particularly in the case of vulnerable consumers like older generations and financially at-risk customers.
The paper uses a wide range of research to create its goals, including the FCA’s 12,865-person Financial Lives Survey 2017, which was published recently.
What does the paper cover?
The Our Future Approach paper outlines the FCA’s expectations of firms, from treating customers fairly and only selling them relevant products, to ensuring that there are no post-sale barriers keeping customers from receiving advice or services after they have bought a product.
The document can be broken down into five core points:
- The responsibility of firm and customer
Customers should feel safe in the knowledge that customer fairness is a defining factor in the firm’s corporate culture. Any products or services sold must be appropriately matched and fully understood by the customer before they make any contractual agreements.
- Regulation for vulnerable consumers
Extra care should be taken to avoid exploitation when dealing with vulnerable consumers. These could include older generations, people with illness or people in financial difficulty. It is up to the firm to look out for signs of vulnerability, and to have some sort of policy in place advising on how to deal with at-risk consumers.
- Keeping up with a constantly changing industry
The financial services industry is constantly evolving and the FCA is stepping up its game to allow for these changes. Putting behavioural economics and Data Sciences into action will help the FCA to keep up with these latest changes and allow them to tailor their regulatory processes to the current climate.
- Identifying and dealing with exclusion
Previous studies have shown that there is an access problem for certain sectors of society. The FCA is planning on working together with firms and stakeholders to implement strategies to identify and deal with any exclusion problems.
- Ensuring that all consumers are receiving better service
The previous four points are all interlinked and conformity with all four of them is needed in order to improve the services that consumers are receiving. This improvement also requires firms and consumers to work together alongside the FCA and other governing bodies.
You can read the full paper here, and a complete follow up of the consultation will be released in February 2018.