This week marked the start of the Committee Stage of the Financial Services Bill in the House of Lords. Committee stage is the first stage in the legislative process where amendments (or changes) can be suggested to the Bill.
We support the amendments proposed by Lord Holmes which are integral for improving financial inclusion in the UK through protecting SMEs, reviewing financial service regulation and adding a financial inclusion objective to the remit of the Financial Conduct Authority (FCA). You can find full details of these amendments here.
In particular, we support the third amendment to add a Financial Inclusion Objective to the Remit of the Financial Conduct Authority (FCA). The Commission recently submitted a joint response, along with Fair By Design, to the Financial Services Future Regulatory Framework Review which included a recommendation that the FCA should be required to have a cross-cutting statutory duty to promote financial inclusion as a core objective. You can find our full response here.
Currently the FCA has no clear statutory requirement to address financial inclusion issues at all. It also does not routinely have regard to issues of financial inclusion across all of its work, wherever it is appropriate. By their very nature essential services, such as credit, payment systems and insurance are needed by everyone. However, currently poorer people pay more for products and services than those better off and products and services often do not meet people’s needs. Some people are excluded altogether. This is the justification for having a social objective like financial inclusion.
With our proposed new objective, the FCA will have responsibility for addressing the ways that markets often exclude those that are most vulnerable or disadvantaged.
This amendment will not only help achieve this, but also give the FCA the responsibility to require firms to report on their use of financial technology (FinTech) in the pursuit of this objective.