Not my views but those of the FCA which today published consumer protection proposals which could affect every regulated firm.
It's a damning indictment of a sector of such importance to the UK economy. It's just not trusted by millions of people.
Treating Customers Fairly rules and the Financial Advice Market Review of 2015 were mere starters, it seems, when it comes to consumer protection if we really want to restore trust.
The FCA wants to implement new ‘Consumer Duty’ proposals which will raise consumer protection to a “higher level”, according to the FCA.
Before I continue, it’s worth noting here that these are only consultations on proposals which may not happen until well into 2022. However, older readers may well recall that FCA consultative proposals often have a habit of making the rulebook without too much change.
So what’s the plan?
The FCA view seems to be that its consumer protection rules do not go far enough and need considerable beefing up.
The reason for this is that, according to the FCA’s Financial Lives Survey of last year, 1 in 4 people lacked confidence in financial services and only 35% of respondents agreed that firms were honest and transparent.
I suspect the recent debacles over LCF and others, which have certainty damaged trust in the regulator as well as the industry, were also factors.
I have no doubt there is a persistent lack of consumer trust in financial services. Given the rise in the number of scams and frauds it's understandable consumers struggle to trust others with their money.
So what does the FCA propose? You can read the full story here 'FCA outlines stronger protection for consumers' but the gist is that the regulator wants a new set of rules which will drive a “shift” in culture.
The difficult part here will not be drafting rules but in implementing and enforcing them. Without some very clear new rules, there may be a distinct lack of clarity over what’s required and firms may struggle to understand what their actual duty is.
Having said all this, there is no doubt that the industry will find it difficult to gain the complete, or near complete, trust of consumers without change. These proposals could well be the beginning of that change.
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Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience. This topical comment on the Financial Planning news appears most weeks. Follow @FPT_Kevin