A ShareSoc News item by ShareSoc Director Cliff Weight
In our response we highlighted:
- The need for the system as a whole, including regulation, to work better for consumers
- We welcome the clear recognition in the CFI’s Foreword that there is indeed a problem – that there are suitable and inexpensive products, but people do not use them enough. In addition, that firms are not generally keen to promote them and that progress is slower than the FCA would like.
- The market runs largely in the interests of the providers of financial services, not in the interests of the consumers
- The FCA states that its strategic objective is one of “ensuring that the relevant markets function well”. We would like the FCA to confirm unequivocally that ensuring good outcomes for consumers is how they intend to interpret their objective going forward.
We recommended these solutions:
1. Tell the full truth about costs and charges, especially the importance of minimising, or avoiding altogether, annual percentage charges;
2. Empower people by pointing out the simple, good value services they can actually use, that do not normally need the involvement of a financial adviser;
3. There needs to be a step change in financial education at all ages. Financial education needs a radical reform and a much better plan;
4. There is a wide spectrum of sophistication of financial knowledge among consumers. This spectrum from novices to experts needs to be taken into account. The solution is not to apply a ‘one-size-fits-all’ approach which all too often produces a ‘nanny-state’ outcome. Most consumers see this a patronising and unhelpful.
5. Better regulation.
We made specific recommendations for change in Q17, as a result of lessons from the Woodford scandal, and in Q21 about Pre-emption rights for minority shareholders.
ShareSoc and UKSA, the UK Shareholders’ Association worked closely in drafting our responses. However we have some differences of scope, perspective, and emphasis; hence we have made separate submissions to this CFI.