The City regulator has made consumer investments its priority after seeing scammers take advantage of people’s search for yield.
At the City Week 2020 – The 10th International Financial Services Forum, Christopher Woolard (pictured), interim chief executive of the Financial Conduct Authority (FCA), said the consumer investments market has seen a rise in scams.
He said that scammers are taking advantage of consumers searching for yield in this low interest rate environment which contains fewer safer, better-understood products offering healthy returns.
“The FCA has made consumer investments a business priority and we’re determined to see better outcomes,” Woolard said in the speech.
“We have banned or restricted some of the riskiest products and we have investigations under way into some of the bad advice we have seen.
“But there have been too many scams and too many scandals. We are open to making some major changes in our regulatory approach and are calling for input to help us consider these.”
This follows recent action by the FCA in this market, such as imposing a temporary ban on the mass marketing of speculative mini-bonds, which the regulator then made permanent.
Woolard will step down from the FCA board and any executive or decision-making roles from 1 October 2020, after completing a review of the unsecured credit market.
He said there is still demand for unsecured credit and some of that is being met by changes in business models and new developments in unsecured lending including the growth of unregulated products in retail and the workplace.
“That shift poses fundamental questions about the unsecured credit market,” Woolard said in the speech.
“I’m delighted to have been asked by the FCA bard to review how regulation can support a healthy unsecured lending market. The review will also take into account the impact of the pandemic on employment security and credit scores.”
Woolard added that Covid-19 has made it more essential the regulator keeps up to date with technology and uses its full range of powers at its disposal.
“We need to look at whether our handbook of rules is doing what it needs to do, and amend if necessary,” he said.