Financial Conduct Authority Must Think Financial Inclusion

The Financial Inclusion Commission and Fair By Design are calling on the Government to introduce a cross-cutting “must have regard” to financial inclusion for the Financial Conduct Authority (FCA). This should include a statutory duty to report to Parliament annually on:

• the state of financial inclusion in the UK
• measures that the FCA has taken, and is planning to take, in order to advance financial inclusion
• recommended additional measures which could be taken by government and other public bodies to promote financial inclusion.

Read our open letter

The Issue

Everybody should have access to financial products and services that meet their needs over the course of their lifetime. For this to happen the market needs to be able to accommodate the specific needs of people on low incomes and with certain characteristics, such as those with a physical disability or experiencing poor mental health – regularly referred to as consumer vulnerabilities. However, a market has evolved where those who often have the least resource and are most vulnerable:

• struggle to afford, or have to pay extra for, appropriate products and services because they are deemed to be a higher risk/not as desirable to serve;
• are not able to access products and services that meet their needs because they are deemed to be ‘nonstandard’;
• are excluded altogether.

The Financial Conduct Authority (FCA) has a range of powers and tools that it uses to regulate the market which include its statutory statutory objectives as well as the Treating Customers Fairly outcomes and its Public Sector Equality Duty. Despite all of this, there is still no clear duty or cross-cutting ‘must have regard’ provision to tackle financial inclusion. This results in many consumers falling through the cracks with regulator and government often pointing to each other for action. The new FCA Consumer Duty will not address this issue either. Without this there is no clear statutory requirement for the FCA to address, or even consider, financial inclusion issues across its work.

The Solution

We want a clearer remit placed on the regulator to ensure it routinely and properly explores financial inclusion issues across its work, allowing greater clarity on unintended consequences, the best interventions needed to ensure financial inclusion, as well as who is best placed to act. This will sometimes be the FCA, the government, or a mixture of institutions working together.

The Future Regulatory Framework Review provides us with the opportunity to help create a UK where everyone is financially included.

What we are calling for:

The FCA should be required to have a cross-cutting “must have regard” to financial inclusion. This should include a statutory duty to report to Parliament annually on:

• the state of financial inclusion in the UK
• measures that the FCA has taken, and is planning to take, in order to advance financial inclusion
• recommended additional measures which could be taken by government and other public bodies to promote financial inclusion.

UPDATES SINCE THE CAMPAIGN LAUNCHED

31/03/2022

On Monday 31st March Channel Five News ran a special feature on the Poverty Premium. Fair By Design’s Director Martin Coppack was featured in the programme along with Toynbee Hall’s Sian Williams. Martin discussed why the campaign is so important.

31/03/2022

On 16 June 2022 The Treasury Select Committee (TSC) published their report into the Future of Financial Services Regulation. The report endorsed Fair By Design’s calls for the Financial Conduct Authority (FCA) to be given a ‘have regard’ to financial inclusion and to report annually to Parliament on financial inclusion in the UK. Read our full response here.

16/11/2022

Fair By Design Director Martin Coppack gave oral evidence before the Public Bill Committee on the Financial Services & Markets Bill. Speaking alongside Natalie Ceeney CBE (Chair of the cash action group), Martin discussed insurance, financial inclusion, and the poverty premium.