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Our response to HM Treasury consultation Future Regulatory Framework (FRF) Review

Download our response

The Treasury consulted on its proposals for ‘adapting the UK regulatory framework for financial services to ensure that it remains fit for the future’.

We welcome the commitment from Government in this consultation paper to maintaining high standards of consumer protection, Our response focuses on making sure the proposed reforms do not reduce expectations or lower the bar of standards of consumer protection.

In summary:

  • We are concerned that the proposed new Financial Services and Markets Act 2000 (FSMA) objective on growth and international competitiveness could become rivalrous to the existing consumer protection objective when applied to markets like mortgage or consumer credit and blunt the FCA’s focus on consumer protection. We ask HM Treasury to consider and articulate further how the proposed objective would work with the existing consumer protection and competition objectives in practice, taking account of the new Consumer Duty.
  • With regard to the proposed power for HM Treasury to require the regulators to review their rules, preserving the regulators’ independence is vital so we would urge the Government to clearly set out the scope and grounds for this power to be used, such as what might constitute ‘exceptional circumstances in the public interest’.
  • We support the proposal to expand the number of statutory panel members to reflect the diversity of experience of consumers. Consumers using financial services are an extremely broad group with a very wide range of differing needs, problems and concerns. Giving consumers a voice takes up time and resources that can be in short supply for consumer groups. Therefore, we urge the Governance to set out a strategy, as part of this review, that would allow the consumer panel to support (including through funding) collection of insight by consumer organisations.
  • We make the case for legislation to give the FCA a clear and specific focus on financial inclusion. Our recent research shows how consumer credit markets continue to cause detriment for financially vulnerable consumers, with high cost credit still more strongly associated with harm. The current policy response is not sufficient. The Government should use the opportunity of any forthcoming financial services legislation to introduce a strong and targeted statutory financial inclusion focus for the FCA.
  • Finally, in light of the new Consumer Duty, we urged the Government to use this review to consider how the FSMA might be amended to clarify and strengthen the authority of the FCA’s consumer protection objective.

You can download our full response here