Context
The FCA has published its Regulatory Priorities report for Consumer Finance. The Regulatory Priorities reports are replacing the 40+ portfolio letters the FCA had been issuing and will be published annually, setting out the FCA’s areas of focus by industry sector.
The reports should act as a guide for firm’s boards and CEOs, which the FCA expects to read carefully and act where they need to.
Key points to note and next actions
The FCA has noted three Consumer Finance Priorities for the next year and expects firms to:
- Consumers can access credit that meets their needs
Lend responsibly, providing well-designed credit that offers fair value and meets consumers’ needs. It also wants firms to continue to help those currently excluded from credit and will support firms who want to innovate. - Firms support consumers who struggle with debt
Ensure consumers can easily get suitable support without unnecessary barriers. The FCA is working with firms to make it easier for borrowers in financial difficulty to find and get help, improve lender forbearance and support and drive up the quality of debt advice so it is appropriate to consumers’ circumstances. - Consumers can complain when things go wrong and get appropriate redress
Properly identify and deal with complaints. Firms should keep adequate records, undertake root cause analysis and hold sufficient funds to meet potential and actual liabilities.
Motor finance firms should prepare to work constructively with us on a potential redress scheme as the most efficient way to address liabilities for consumers treated unfairly and bring certainty for all affected.
Claims management companies (CMCs) should deliver high-quality, fair-value services that help consumers pursue legitimate claims for redress.
Alongside these priorities, the FCA will continue its work to ensure the Consumer Duty is integral to how regulated firms treat their consumers, undertaking risk-led reviews of emerging high-impact topics, such as whether fees and charges represent fair value.
It will also consult on Chapter 3 of the Consumer Credit Sourcebook (CONC), covering financial promotions and communications, to remove unnecessary prescription, update requirements and improve alignment with the Duty.
The FCA highlights that it will use the most suitable tools to act wherever it identifies serious misconduct, including supervisory intervention or enforcement.