Ahead of the Committee Stage of the Financial Services and Markets Bill, The Investing and Saving Alliance (TISA), the cross-industry financial services membership body, is calling on legislators to place a new secondary objective to promote the financial wellbeing of UK households on the regulator, the FCA. The Second Reading of the Bill is expected to commence in the coming weeks with the formation of a Public Bill Committee.
Broadly, TISA supports the Government’s objectives as set out in this Bill. TISA agrees that that the regulators’ primary objective should be to ensure safe and sound firms, well-functioning markets and the protection of consumers. TISA is also in agreement with current proposals to establish a secondary objective to facilitate growth and competitiveness.
However, TISA believes that the regulators should be striving for growth and competitiveness alongside promoting the financial wellbeing of UK society. The Government’s Money and Pensions Service defines financial wellbeing as follows: “Financial wellbeing is about feeling secure and in control. It is knowing that you can pay the bills today, can deal with the unexpected, and are on track for a healthy financial future. In short: confident and empowered.”
The FCA currently runs several initiatives linked to promoting financial wellbeing. For example, the FCA’s InvestSmart consumer campaign is targeted at individuals investing in high-risk investments (including some that sit outside the existing regulatory perimeter), to promote better awareness of the risks. Also, in September 2021, as part of their Consumer Investments Strategy, the FCA rightly identified the risk from inflation posed to people sitting with large cash holdings. The FCA are working on initiatives to address this risk to such people.
TISA believes it is vital that the FCA continues its focus on initiatives that promote financial wellbeing and that it does not water down its interventions because of the additional secondary objective of facilitating growth and competitiveness.
Prakash Chandramohan, Strategic Director at TISA, said: “The UK financial services sector needs to maintain its competitiveness among growing international competition and a tough macroeconomic backdrop. That much is clear, and we support Government efforts to include this as a secondary objective for the FCA.
“But it cannot come at the price of watering down initiatives focused on improving the financial wellbeing of UK households. This is why TISA, as a consumer-focused financial services membership body, is calling for the inclusion of promoting the financial wellbeing of UK households alongside competitiveness as secondary objective for the regulators.
“UK consumers are facing difficult economic conditions up ahead, and it is clear that industry, regulators and Government will need to align to provide the strongest possible support for the public to face down these challenges. We therefore strongly believe this proposal for a secondary objective achieves the right balance between the competitiveness objective and promoting the financial wellbeing of UK households.”