The regulatory and policy environment for financial services has changed rapidly in the UK and the EU over the last few years. We are still seeing the fall-out from the financial crisis, and we have worked extensively with the Financial Conduct Authority since it took over from the FSA in 2013.
Banking Standards
We submitted our position to the Parliamentary Commission on Banking Standards (PCBS)[1], the Independent Commission on Banking (ICB)[2] and the Banking Standards Review (BSR)[3], calling for the banking industry to observe a duty of care in all dealings with customers.
To ensure that the banking industry adheres to the necessary standards to make the new accountability regimes a success, we support the creation of a statutory standards body for the banking industry that requires personal membership before an individual can practice within the sector.
Combined with the FCA’s new senior managers’ regime[4], a stronger, independent banking standards body is well placed to address the cultural and behavioural change that the UK banking industry needs.
Consumer Credit
In 2014, the Financial Conduct Authority assumed responsibility for the regulation of the consumer credit sector, a major change compared to the licensing regime operated previously by the Office of Fair Trading.
The Consumer Panel welcomed[5] the FCA’s proposals for a price cap on high‑cost short‑term credit, and the general tightening up of conduct in this market. Nevertheless, as “mainstream” sources of credit also lead to over-indebtedness, we would like the FCA to also examine the costs of other types of consumer credit – in particular overdrafts and credit cards.
The Consumer Panel is supportive of the Illegal Money Lending team which guards the perimeter and would like to see a more sustainable funding model in place for this activity.
We are closely following the FCA’s review of the credit card market, and we also welcomed the CMA’s launch of a full investigation into personal current accounts in November 2014. We have urged it to focus on price transparency that will help consumers access the products that are right for them.
Consumer rights and redress
Protection of consumers has been strengthened through the Consumer Rights Bill and the implementation of the Alternative Dispute Resolution Directive. These will provide better means of redress when firms get it wrong.
The Consumer Rights Act 2015 will have an impact of many aspects of consumers’ dealings with financial services firms. The Panel supports the principles of the Bill and the numerous benefits it will undoubtedly bring for consumers and businesses. However, we believe the Bill would have benefitted from a number of amendments[6] to protect consumers from unfair changes in fees and charges.