FCA to take action against “illegal” lenders
The Financial Conduct Authority (FCA) is working on how it collects data to better protect vulnerable consumers, including those investing in “illegal” lenders.
Speaking at the Building Societies Association, Charles Randell (pictured), chair of the FCA, said that providing extensive data on products and sales processes on high-risk unregulated investments is difficult as these firms are not regulated by the FCA.
But he added that where the risk of serious harm to vulnerable consumers is very clear, the case for change shouldn’t need to be supported by the same type of evidence.
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Randell said the City regulator should as a minimum define what it can expect to achieve with its powers and track progress towards achieving those outcomes while also not hesitating to call out actions.
He said the FCA wants a healthy consumer credit market, where people get credit they can afford to repay and have access to high-quality advice and guidance at the right time in their lives.
Read more: How the FCA is tackling consumer investments
Randell said the City regulator will need to ensure that it is collecting and using the right data so that we can act quickly to achieve the outcomes it wants.
He said the FCA has made a significant investment to modernise its systems so that it has better capacity and tools to collect, store and analyse data which will transform its ability to act.
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Randell said as the regulator develops its approach to regulation in the post-pandemic world, it needs to reset its expectations of how firms’ define the outcomes customers can expect from their products and services and how they manage and demonstrate whether these are delivered.
He said he was “cautiously optimistic” that the changes at the FCA will deliver what it aims to do.
Read more: P2P platforms worry that new FCA proposals will push out retail investors
“’Groundhog Day’ is my favourite movie,” said Randell.
“I could happily watch it over and over again – in fact, I could watch it every day. Its message is uplifting: by changing your everyday actions to achieve your goals, sometimes in small ways, you can produce better outcomes – not only in your own life, but in the lives of everyone around you.
“Of course, if you want different outcomes but don’t change what you are doing, your actions become the very definition of insanity: doing the same thing over and over again and expecting different results.
“We’re determined to transform the FCA to produce better outcomes for the post-coronavirus world. A world with an increased number of vulnerable consumers.
“A world dominated by the opportunities and risks of digital business models. A world with climate and biodiversity emergencies. And a world with new frontiers for UK financial services.
“Sometimes, defining the outcome and linking it to a success measure is simply very difficult. The unsecured credit market is such an area: we say we want people to have access to sustainable credit, but should we be measuring the impact of our actions not only on those who do get credit from an authorised firm but also on those who don’t?
“What if people can’t put food on the table or turn to illegal lenders? The outcomes we want are often affected more by broader social policy than by actions that we or the firms we authorise can take.”