Easing the burden on over-indebted consumers is among the Financial Conduct Authority’s (FCA) priorities in 2020, the regulator has announced.
Its own Financial Lives data shows that there are 7.4 million adults in the UK who are over-indebted and find their financial commitments a burden.
The FCA’s Sector Views look at the impact of macroeconomic developments and common drivers of change emerging across financial markets. They also outline areas where there may be a negative impact on consumers or the integrity of the financial system in that sector. The report sets out which factors are driving harm, as well as considering how the harm may develop over time.
The regulator also highlighted high-risk retail investment products, which expose customers to more risk than they can absorb. Often, it said, some of the highest risk products are marketed directly to retail consumers with poor communication of the risks involved and implications that the investments are regulated, when this is not the case.
It also pledged to scrutinise new payments firms, noting that some of their products don’t have protection in place for consumers, including some services advertised as ‘current accounts’ which aren’t covered by the Financial Services Compensation Scheme.
FCA interim chief executive, Christopher Woolard, said: “We are committed to reducing harm in the markets we regulate. Our analysis of markets ensures that we do this effectively, helping us to decide where to focus our attention. We expect firms to be similarly focused on preventing harm and assisting us where they can, and we will continue to actively supervise all firms to ensure they achieve this.
“What is clearly apparent from the Sector Views, is many of the harms we are seeing are created by a significant number of smaller firms we regulate or firms beyond our remit.”
Away from credit and banking, the FCA will also be scrutinising pricing practices in insurance, which it says still penalises loyal customers. It said the ‘loyalty penalty’ in home and motor insurance cost six million longstanding consumers an extra £1.2bn in 2018, and the FCA is finalising remedies following its market study.
The FCA’s Jonathan Davidson will give a regulatory update at the Credit Summit 2020 on March 19. To book your place, visit the Credit Summit website.