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By Huw Jones
LONDON, April 7 (Reuters) - Britain's markets watchdog says
the coronavirus pandemic has shown a need to reinforce consumer
protection and it will draw up new longer-term measures to help
detect if vulnerable customers are being ripped off.
The epidemic has already prompted the Financial Conduct
Authority (FCA) to propose several measures such as easing the
burden of credit card payments for cash-strapped consumers now
in their third week of lockdown and with no clarity on which
businesses will survive.
On Tuesday it said pricing practices in general insurance,
cash savings and home loans had already showed how markets can
fail to offer fair value to customers.
"These risks of harm could be exacerbated by the global
economic uncertainties caused by coronavirus," the FCA said in
its business plan for 2020/2021.
"Over the next three years, we will develop an approach with
measurements and metrics to assess fair value for consumers,
using our ongoing evaluation of our previous intervention," the
watchdog said.
Payments services firms have been growing fast and the FCA
said it was concerned that the coronavirus emergency will affect
their financial strength and consumer's ability to access cash.
The distribution of investment products was not working well
enough for consumers to make effective decisions about what to
do with their money.
"An area where we have seen increasing consumer harm is
retail investments," the FCA said.
"We remain concerned that consumers may be getting
unaffordable credit, allowing firms to benefit from exploitative
fees and charges," it said.
It proposed launching a five-year campaign to publicise how
consumers can avoid scams, the costs recovered from fees on the
firms it regulates.
"This response to COVID-19 could prove a useful blueprint
for being more proactive, pragmatic, outcome-focused as a
regulator," said David Miller, a partner at consultants KPMG.
The FCA has reviewed pay practices in the wholesale broker
sector.
"We also expect to introduce a more risk-sensitive
prudential regime for investment firms in 2021," it added.
In its 2020/2021 business plan the FCA set a 587.6 million
pounds ($725 million) for the coming financial year, up 5.2% on
the previous year, but fees paid by 71% of the smallest firms
will be frozen, while others will have until the end of 2020 to
pay.
With the full impact of the epidemic unknown, the watchdog
said its business plan may need to be re-written as swathes of
policy work have already been delayed.
"In a matter of weeks, coronavirus has altered the UK’s
financial landscape dramatically," the FCA's interim chief
executive, Christopher Woolard, said in a statement.
($1 = 0.8105 pounds)
(Reporting by Huw Jones; Editing by Susan Fenton)
