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FCA chief debates vulnerable customers vs caveat emptor


FCA chief executive Andrew Bailey says the regulator’s role is to protect vulnerable consumers while striking a balance with individual responsibility.

Yesterday the regulator launched its “mission” consultation, a set of principles that will inform the regulator’s strategy and day-to-day work.

Speaking at Mansion House last night, Bailey said the regulator is “more on the side of protecting the vulnerable”, and argued whether the regulator should give those customers more attention than others.

He said the regulator has to adhere to the principle that customers must take responsibility for their own actions, but it must also take into account the different levels of experience and expertise customers might have.

Bailey said: “But, if we do give more attention to more vulnerable consumers, the question becomes ‘how do we define vulnerability, bearing in mind that a very large part of the population will be vulnerable at one or more times in their lives?’ We set out our thinking on this in the future mission.

“To give away the ending, we are more on the side of protecting the vulnerable, but recognise the definitional challenge. I remember a time when this question would lead to a lot of agonising over moral hazard. It gets easier when we recognise that vulnerability can create very different financial outcomes for individuals depending on the products they need.”

Separately, Bailey argued the language around enforcement can have unnecessarily negative connotations.

He said: “For enforcement, there is a quite common saying that ‘x is in enforcement’ – to which guilt and punishment will surely follow. We don’t believe it should be seen like this.

“A referral for investigation is just that, and no more; the beginning of a forensic process of investigation to determine what happened and whether enforcement proceedings should be brought or not.”



FCA chief: New mission is not a ‘political shield’

The FCA’s new mission statement is not meant as a “political shield”, the regulator’s chief executive Andrew Bailey has said. It is also not about “repositioning” the regulator, but will better explain what the regulator does and why it does it, Bailey has said. The FCA published the consultation today, describing it as a set of principles […]


FCA looks to target unregulated firms in new ‘mission’

The FCA is eyeing action on unregulated firms and vulnerable customers as it sets out a new “mission”. The FCA today began a consultation on its mission document, a set of principles that will inform the regulator’s strategy and day-to-day work. The FCA says the purpose of the mission is to give clarity over the objectives […]

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The FCA faces a “notoriously difficult” challenge in seeking to justify its approach to tackling misselling, experts say. Last week the National Audit Office reported the FCA had no way of measuring its success in curbing misselling in financial services. In a report on regulation and redress, it said while increased fines and compensation have […]


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. Maybe surprising to some, but I actually agree with what he is saying here, I think we have all advised vulnerable clients at different times and in different times in their own lives.

    The thing is, you cannot enforce morals or morality… you either have it or you don’t, therefore trying to stop the one person or persons who puts their own greed above the needs of another will do so, regardless of rules, regulations and a tick box.

    To start with the FCA need to have some correlation between themselves the FOS and FSCS, I have seen and read of many cases where Caveat Emptor is very plain to see and still the decision has been found against the adviser on a technical hitch, (risk wording, tick box, or you told me so’s, etc etc etc)

  2. Currently, it is too easy for the opportunistic and duplicitous to claim a lack of understanding.

    Personal responsibility must be recognised to the extent that someone who should engage, read letters, brochures, etc cannot claim ignorance at some future date.

    The FOS are a major part of this problem and until it is politically convenient to have them deal with reality, as opposed to fiction, then the views and considerations of Mr Bailey will count for nothing.

  3. “The regulator’s role is to protect vulnerable consumers while striking a balance with individual responsibility”.
    Yes well, quite unlike the FOS then, who’s role is to protect the consumers, all the chancers included, against the IFA at any time in the IFAs life, regardless of how vulnerable he/her is.

  4. Judging by the statistics most of the ‘mass market’ are vunerable customers. Remember that about half the workforce – 16 Million Adults – have the reading and writing skills of 11 year olds. (MP Commons Public Accounts)

    12million with Literacy Skills of Level 1 and below (Equivalent to 11 year olds)

    16 million with numeracy skills of level 1 and below.

    (78% are innumerate and 58% are illiterate). And about half don’t know what 50% means.

    Is it any surprise then when engaging with financial services – which is highly numerate – they are lost souls. A very compelling reason DH to avoid this sector.

  5. Kite mark products then and take some responsibility yourselves!!

  6. Is there another industry where somebody can announce that ten years earlier he was so mystified and confused by events that he now wishes to be restored to his previous position?

    Try it with Ford, Apple, Microsoft, HMR&C or maybe . . the FCA

  7. Harry isn’t it grand that when I mentioned reading ages to Tim Jones of Nest he couldn’t tell me the reading age of their site – and was disinterested when I informed him it was 18!

  8. Do you know, I actually agree with most of that- let’s see if we, as the professionals, will now step out from behind our fear and apply some common sense as well.

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