The Financial Services Consumer Panel (FSCP) has called on the regulator, the Financial Conduct Authority (FCA), to get tough with firms who have still not fully implemented the requirements of the Retail Distribution Review (RDR).
The FSCP seeks to represent the interests of consumers when financial regulatory policy is being developed.
The RDR has now been in force since January 1 2013. It forced financial advisers to attain higher level qualifications, banned the receipt of commission payments for investment and pension advice, and set new requirements for how firms describe their services.
It is the last of these that has particularly exercised the FSCP. In its thematic review of March 2014, the FCA revealed that 73% of firms surveyed were not meeting the RDR disclosure requirements in some way. Common failings related to: firms being insufficiently transparent as to what costs would be for individual clients; not clearly describing the nature of the service they offer in return for fees received; not informing clients of their right to cancel ongoing advice fees; and where firms gave restricted advice , they were not clearly informing clients as to the nature of the restriction.
The FCA described the findings as “unacceptable”, but only referred two firms to its Enforcement Division over these issues.
In its Annual Report, the FSCP also:
- Welcomed the recommendations of Parliamentary Commission on Banking Standards regarding conduct and accountability for bank staff, and looked forward to similar standards being introduced in other areas of financial services
- Called on the FCA to engage with organisations it does not currently work extensively with, in order to ensure that unauthorised firms do not carry out consumer credit activities
- Called for action on unjustified and/or hidden investment charges
- Urged the FCA to introduce better protections for ‘mortgage prisoners’, who are trapped on a poor mortgage rate but cannot obtain a re-mortgage due to the strict new Mortgage Market Review assessment criteria
- Asked the FCA to consider that significant customer detriment can result from forms of credit such as credit cards and overdrafts, as well as payday loans. The FSCP also asked for a cap to be imposed on the cost of all forms of credit, similar to that to be introduced on payday loans
Sue Lewis, chairman of the FSCP, said:
“There is still widespread non-compliance with RDR rules. ‘Non-advice’ continues to pose a risk for consumers.” In her foreword to the Report, she also comments: “I do not believe that most firms have really embraced the idea of treating customers fairly.”