FCA urged to prioritise financial inclusion

Pressure is growing for the Financial Conduct Authority (FCA) to make financial inclusion a priority in its work, with a coalition including the regulator’s own former chair, consumer rights groups and finance research bodies urging Chancellor Rachel Reeves to add this as a goal alongside the existing objectives of encouraging growth and competitiveness.

The group has sent a letter to Reeves ahead of the Budget later this month, which calls for her to “include financial inclusion as one of the financial policy priorities to which the FCA should have regard” when she sets out the FCA’s remit for this Parliament.

Signatories include former FCA head Charles Randell, campaigners Martin Lewis and Johnny Timpson, as well as Professor Sharon Collard, University of Bristol Personal Finance Research Centre, and a host of consumer rights bodies

The letter states: “Financial inclusion can play a vital part in realising the Labour government’s ambitions for economic growth, giving people more control of their financial lives and enabling them to reduce the financial shocks that result in financial distress, to increase their participation in the economy and to reduce the load on public services.”

But it goes on to add: “A market from which a significant portion of the population is effectively excluded is not working well,” arguing that “the creation and implementation of an effective National Financial Inclusion Strategy will only be possible if the FCA prioritises this issue and devotes appropriate resources to both policy and execution.”

“The FCA’s intervention into the motor finance market at the beginning of this year was marked by confusion about the regulator’s aims and uncertainty over its proposed remedies, with the recently revealed delay to announcing any outcomes adding to the stress within the sector.

“As a result, there is a very real risk that lenders will withdraw from the auto finance market, with the result that consumers will face less choice, and potentially more expensive borrowing than before.

“Delaying the decision also leaves firms bracing themselves for increased complaints and potential redress schemes. The need for continued contingency -when there may be no case to answer – is reducing the capacity for the industry to play its vital role in enabling the transition from ICE to battery. There is a clear opportunity for the new Government to intervene here to make the regulation work properly for the good of consumers and industry.

“The next AFC conference in November will focus on the likely impact of the new Government on the auto, equipment and asset finance industries and we will be exploring this issue in more depth then.”

Find out more about AFC’s November conference here.