"The financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority for financial services providers"
The Treasury Committee has published a new report on consumers’ access to financial services, suggesting more powers for the FCA and repercussions for firms who don't act in their customers' best interests.
MPs raised concerns that financial services providers are "currently not required" to act in their customers' best interests.
The report concluded that "if the Financial Conduct Authority can’t enforce such behaviour, the Committee would support a legal duty of care, creating a legal obligation for firms".
The report also discussed the range of enforcement powers the Equality and Human Rights Commission has under the Equality Act 2010, which requires service providers to make reasonable adjustments for individuals. These adjustments include providing interpreters, tactile bank cards and Braille or Moon tactile font communications.
The Committee suggested that enforcing compliance with the Equality Act should be transferred to FCA or the Financial Ombudsman Service, as the EHRC "is unable to take on individual cases due to a lack of resources".
The Treasury Committee concluded that the FCA and FOS "must be given the legal power to take on such cases on behalf of consumers".
Finally, the report said the FCA should make it mandatory for firms to publish the size of their loyalty penalties to consumers.
Citizens Advice recently calculated that the cost of being a long-standing customer could be nearly £1,000 extra per year and the CMA found that vulnerable people may be more at risk of paying the loyalty penalty.
Nicky Morgan MP, Chair of the Treasury Committee, said: “The importance of financial inclusion cannot be understated. As the World Bank said recently, there can be no end to poverty without financial inclusion. And as Eleanor Southwood from the RNIB told the Committee, financial inclusion is about independence, protection from financial abuse, and confidence.
“The financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority for financial services providers, the Government, and financial regulators.
“It can no longer be an option for banks to ignore financial inclusion.
“A patchwork of improvements and adjustments have been targeted at some groups of consumers, but the basic level of access is still not universal. There are significant areas of concern where vulnerable consumers are effectively excluded from participating with financial services providers.
“This report makes a series of recommendations to Government and the regulator for how consumers’ access to financial services can be improved.”
Stephen Jones, CEO of UK Finance, commented: “The industry takes its societal responsibilities extremely seriously and is committed to looking after every customer, including those in vulnerable circumstances. The industry’s commitment to financial inclusion is best illustrated by the basic bank account which offers free if in credit banking to nearly 7.5 million customers and is designed specifically to ensure that the widest range of citizens can have free, safe access to the banking system, including the disadvantaged.
"We will continue to work closely with the government, regulators, the Treasury Committee and wider stakeholders to deliver better access and outcomes for all in our society.”