Recommendation 12

HM Government · verbatim extract Accepted

In the context of the cost-of-living challenges, and the upheaval the pandemic created in the lives of millions of consumers in the UK, the FCA has sought to urgently act in a number of areas in the pursuit of consumer protection, as seen in our activities during the peak of the pandemic and most recently with our letter to 3500 lenders 6 reminding them of their obligations to consumers in payment difficulties and the most vulnerable. In our new FCA Strategy 7 published earlier in the year we have set out high level consumer outcomes which drive our work: Access, Fair Value, Suitability and Treatment, and Confidence. These outcomes go to the heart of financial inclusion. We already work to boost inclusion, where this makes sense in the pursuit of our objectives and consider the impact our interventions could have on access; for example, our work setting out guidance on vulnerability, looking at pricing in the General Insurance sector, or improving access in the travel insurance sector for customers with pre-existing medical conditions. We also explicitly consider the possible impact of our interventions on access and inclusion, having most recently done so when developing the new Consumer Duty. In addition, where necessary Government can act to help us boost inclusion where potential problems have been identified. We are pleased that Government has recognised that cash continues to be essential for many people, including consumers in vulnerable circumstances as well as small businesses. We welcome Government’s intent for us to have new powers to help protect consumers access to cash and expect to use our new powers to ensure that the provision of cash access facilities continues to provide appropriate coverage across the UK for those who need it. We do not think a have regard on inclusion would add to our existing ability to act within our remit in line with our objectives; and it might risk increasing expectations that the FCA should step in to fix problems that it does not have the power to solve, perhaps contributing to further confusion rather than addressing the root causes of exclusion. The FCA does not have any levers to make firms offer services to consumers (the decisions to set public service obligations appropriately sit with Parliament and Government—as is the case on forthcoming access to cash legislation), or to change underlying factors which might mean that consumers are considered higher risk by firms. We have not yet seen any convincing arguments that a have regard would strengthen the power we have to investigate and solve exclusionary practices on the part of firms. In addition, it is sometimes necessary to intervene in ways which restrict access to financial products where there is risk of consumer harm. Affordability and appropriate pricing for risk are important tenets of the provision of financial services.