Labour wants the Financial Conduct Authority’s competition objective extended so it has to consider how easily consumers can find appropriate products that are value for money.
The proposed change to the Financial Services Bill would add to the regulator’s operational objective of promoting effective competition in the interests of consumers by setting out what those interests are.
The bill already says the regulator should take account of the varying needs of different consumers and the information they need to make informed choices, the ease of switching providers, the potential for new entrants to the market and how far competition is encouraging innovation.
Labour wants a further “have regard” added to this list so the FCA also considers “the ease with which consumers can identify and obtain services which are appropriate to their needs and represent good value for money”.
Shadow Treasury financial secretary Chris Leslie says: “I want the FCA to be able to stop unfair overdraft charges, excessive fees and complicated pricing structures where they hinder transparency that might benefit the consumer.”
Guidance, published alongside the bill in January, said the FCA will not directly regulate prices but will try to spot potential consumer detriment and flaws in competition by looking at “comparative prices” and hidden costs. It said: “We expect the FCA will take a keener and more informed interest in questions of value for money than the FSA has done.” This objective would give the FCA a statutory requirement to carry out that role.
Leslie says: “The Government has not gone far enough to tackle behind-the-scenes prices which can mask the true costs of financial services. An FCA that looks at how easily consumers can identify and obtain products which fit their circumstances properly and are clearly value for money is part and parcel of the comprehensive definition of a competition objective.”
The amendment was put forward by Leslie and shadow Treasury economic secretary Cathy Jamieson, and will be looked at during the bill’s committee stage which starts tomorrow. Until March 20, 20 MPs, including the Treasury financial secretary Mark Hoban, will go through the bill line by line debating proposed changes.