The unprecedented measures we put in place provided support for those on mortgages or in other debt who were adversely affected by Covid. Over 80% believe they would have struggled without them. Yet many other people have taken the opportunity afforded by lockdown to pay down debt and increase savings.
We can see a real difference in terms of impact on the haves and have nots in this crisis that doesn’t conform to the patterns of previous economic shocks. But for the poorest and most vulnerable in society there is still a demand for credit.
Increasingly some of that demand is being met by changes in business models and new developments in unsecured lending including the growth of unregulated products in retail and the workplace.
That shift poses fundamental questions about the unsecured credit market.
I’m delighted to have been asked by the FCA Board to review how regulation can support a healthy unsecured lending market. The Review will also take into account the impact of the pandemic on employment security and credit scores.
The wider low interest rate environment is also having a profound impact on pensions and consumer investments. Enabled by the internet we see scammers take advantage of people’s search for yield in the absence of healthy returns from safer, better-understood products.
The FCA has made consumer investments a business priority and we’re determined to see better outcomes. We have banned or restricted some of the riskiest products and we have investigations under way into some of the bad advice we have seen. But there have been too many scams and too many scandals. We are open to making some major changes in our regulatory approach, and are calling for input to help us consider these.
In the insurance industry, I welcome the judgment by the High Court on action we took with the co-operation of insurers to resolve uncertainty in the Business Interruption market. There is still far more to do here, and at pace, but I think that action substantially achieved its aim of removing uncertainty and therefore many of the roadblocks to claims being made and assessed.
Longer term, the industry will face the challenge of deciding how it will cover pandemics, not just in business interruption, but travel and other segments. Simply not writing cover may not be the answer here. And we as consumers we will need to decide if we’re willing to pay, and how.
Finally, before I move on, technology. I know I have said a lot on this subject in my time at the FCA, but we need to be even more conscious of the changes technology is having on the sector we regulate, and will have in the future.
And there are some big questions for us to answer. Take machine learning and artificial intelligence. Smart algorithms are often portrayed as some sort of panacea, solving business need and consumer service.
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