The Financial Conduct Authority (FCA) has been busy focusing consumer investments of late.
In September, the regulator made consumer investments its priority after seeing scammers take advantage of people’s search for yield and its call for input on the topic has been a focal point for the alternative lending sector.
Here Peer2Peer Finance News summarises the FCA’s recent work on consumer investments.
Read more: Rules and retail investors
Call for input
In September, the FCA launched a call for input on consumer investments, which closed on 15 December. The City regulator will release its findings later this year and the results will be used to shape the FCA’s work over the next three years.
Among the call for input were FCA proposals for new consumer investment regulations, which suggest that investment products should be simplified, while higher-risk products should be labelled with traffic-light colour coding in an effort to better communicate risk.
Peer-to-peer lending platforms and the UK Crowdfunding Association criticised the proposals, warning that they may push yield-seeking investors into the unregulated space.
Today the FCA launched its digital disruption campaign to prevent investment harm. This uses online advertising to disrupt investors’ journeys and drive them to the FCA’s high return investments webpage, which covers key questions consumers should ask before investing.
This comes as research from the regulator has revealed that a younger, more diverse group of consumers are investing in high-risk products such as cryptocurrency.
The FCA said it will use the research alongside feedback from its call for input on the consumer investment market to help to design a new campaign to address the harm caused by consumers investing in high risk, high return, illiquid investments that may not be suitable for their needs.
The regulator said firms should understand which customers are likely to be vulnerable to and ensure that customers in vulnerable circumstances can receive the same fair treatment and outcomes as other customers.
This followed the FCA’s Financial Lives research which estimated that 27.7 million Brits were financially vulnerable by October 2020, a 15 per cent increase since February 2020.
FCA to publish initial supervisory work on consumer credit guidance
The City regulator has previously said it is continuing to monitor how lenders are implementing its guidance on helping customers affected by the coronavirus and is set to publish its initial findings at the end of March.
Under the regulator’s latest guidance, consumer credit lenders have been allowed to repossess goods and vehicles from 31 January, but only as a last resort and following public health guidelines and regulations when taking repossessions.