The Financial Conduct Authority frequently talks about ensuring ‘favourable outcomes’. Charles Randell, the regulator’s chairman, spoke about ‘outcomes-focused regulation’ when he addressed the Building Societies Association on May 6.
One of the best-known examples of the FCA listing a series of desired outcomes relates to its Treating Customers Fairly activities.
The six TCF outcomes are:
- Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture.
- Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.
- Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
- Where consumers receive advice, the advice is suitable and takes account of their circumstances.
- Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.
- Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
However, Mr Randell said that when it comes to the fourth outcome, on suitability, many firms were still failing to satisfy the regulator:
“Despite the Retail Distribution Review and the increased professionalism that required of the industry, some advisers are still falling short of our expectations, particularly on pension transfers.”
He went on to say:
“We want consumers to have access to high-quality advice and guidance at the right time in their lives, to give them the confidence to make better investment decisions.”
Turning to the consumer credit sector, the FCA chair said:
“We also want a healthy consumer credit market, where people get credit they can afford to repay.”
He mentioned the apparent success of the Rent To Own price cap, which had delivered the favourable outcome of an average fall of 19% in the prices charged by the two largest operators.
However, he also expressed concern over the extent to which some lenders will approve applications for repeat borrowing, and how this is all too frequently leading to unfavourable outcomes, with borrowers “trapped in a cycle of increasing debt as they borrowed the next loan to pay off the last.”
Mr Randell then mentioned the issue of unregulated high-risk investments, where the FCA has limited powers to act simply because it has not been granted permission by the Government to supervise certain activities. However, it cannot be denied that many people who have invested in unregulated areas have suffered unfavourable outcomes.
In conclusion, he referred to ongoing FCA plans to introduce a ‘duty of care’ for firms towards their customers, which it is hoped will lead to an increase in the number of consumers receiving favourable outcomes.