The FCA should have a statutory objective to promote financial wellbeing, according to a leading industry body.
The Investing and Savings Alliance (Tisa) has called for amendments to the Financial Services and Markets Bill, currently at the committee stage, to include this provision.
Tisa pointed out that the FCA currently has several initiatives linked to promoting financial wellbeing, but it said these should now be put on a statutory footing.
This bill proposed states the regulator’s primary objective should be to ensure safe and sound firms, well-functioning markets and the protection of consumers. Tisa said it agreed with this, and plans to introduce a secondary objective of facilitating growth and competitiveness. However it wants to see a further secondary objective of promoting the financial wellbeing of UK society added to this bill so the two would work hand in hand.
The second reading of the bill is expected to commence in the coming weeks with the formation of a Public Bill Committee.
The FCA currently runs several initiatives linked to promoting financial wellbeing. For example, the FCA’s InvestSmart consumer campaign is targeted at individuals investing in high-risk investments to promote better awareness of the risks. Also, in September 2021, as part of their Consumer Investments Strategy, the FCA rightly identified the risk from inflation posed to people sitting with large cash holdings. The FCA are working on initiatives to address this risk to such people.
TISA believes it is vital that the FCA continues its focus on initiatives that promote financial wellbeing and that it does not water down its interventions because of the additional secondary objective of facilitating growth and competitiveness.
Tisa strategic director Prakash Chandramohan says: “The UK financial services sector needs to maintain its competitiveness among growing international competition and a tough macro-economic backdrop. That much is clear, and we support government efforts to include this as a secondary objective for the FCA.
“But it cannot come at the price of watering down initiatives focused on improving the financial wellbeing of UK households.
“UK consumers are facing difficult economic conditions up ahead, and it is clear that industry, regulators and government will need to align to provide the strongest possible support for the public to face down these challenges.
“We therefore strongly believe this proposal for a secondary objective achieves the right balance between the competitiveness objective and promoting the financial wellbeing of UK households.”