Context
This speech, delivered by Nikhil Rathi at the UK Finance annual dinner, covers implementation of the Consumer Duty and the FCA’s monitoring of its impact; the FCA’s approach to regulation where there is increasing use of FinTech; and financial inclusion of those most vulnerable or least digitally enabled.
Key points to note
Consumer Duty
- Firms appear to be on track with implementation of the Duty.
- The FCA’s measurable targets for quantifying the effectiveness of the Duty include:
- A reduction in the number of complaints referred to the FOS.
- An increase in the levels of trust for financial services in their regular survey.
- The FCA wants Consumer Duty to have a positive impact on reducing the FSCS levy, particularly for small businesses.
FinTech
- The FCA wants to work closely with industry to help shape a framework for the use of Artificial Intelligence (AI) and other new technologies.
- It believes the Consumer Duty, alongside the Senior Managers’ and Certification Regime, will give it the framework to respond quickly to innovations so that new products can be trialled, with informed consent and consumer interests front and centre.
- Agency must not be attributed to AI systems or algorithms, as this will risk removing accountability away from firms.
Financial inclusion:
- As firms take advantage of digitalisation, the FCA expects them to make sure that market developments don’t leave groups of consumers behind, particularly those most vulnerable or the least digitally enabled.
- Where the FCA has seen a minority of bad practice in dealing with vulnerable customers, it has demanded changes and used its powers to effect those changes. It will be continuing that approach in the months ahead, as the coming period will be exceptionally challenging for millions of households.
Next actions
None – for information and awareness.