On Friday the FCA announced that it has required 9 firms to provide detailed assessments of their savings products. Our Risk and Compliance expert, Neville Hall reflects on how this illustrates a shift in the regulator’s approach post the introduction of the new Consumer Duty.
The FCA is now analysing the lenders’ fair value assessments that it required last week. The outcome will be published later this autumn and the regulator will specifically assess how (or whether) they represent fair value for consumers.
This very much looks like a concrete manifestation of the ‘paradigm shift’ they are demanding of retail firms, with pro-active ‘enforcement’ compared to their previous more reactionary approach.
There's potentially a fine line between effective consumer protection and unnecessary market interference by the regulator. It could be argued there's plenty of comparison websites out there.
When the FCA start telling individual firms “your interest rates are too low, your charges are too high”, one consequence could be they will simply withdraw the products rather than continuously justify themselves to the regulator, and the competition may decrease. It all depends on the context; it might be a good thing or a bad thing.
But the reality is, if you're in the retail financial services market, this is the new environment so be prepared. Make sure you’ve done your Consumer Duty homework and have continuing governance and metrics to prove you are indeed offering fair value to your consumers.
Within Punter Southall Law, we have a team of highly experienced FS Reg lawyers and advisers. If you would like a friendly chat with one of us, get in touch. Between us we have a lot of experience of dealing with the FCA and can help at all stages of your regulatory journey.