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Scams and scandals mean consumers lack confidence in investment market – FCA
15 September 2020, 09:54
The Financial Conduct Authority wants to hear feedback by December 15 on how the consumer investment market can be improved.
The volume of scams and scandals that have occurred in the investment market mean it is not working as well as it should and many consumers lack confidence in it, according to the City regulator.
The Financial Conduct Authority (FCA) wants to hear feedback by December 15 2020 on how the consumer investment market can be improved.
Issuing its “call for input”, it said that too often, customers receive lower returns than they should because of unsuitable products with high fees.
In a complex and diverse market with more than 5,000 advice firms and over 27,000 advisers, it is essential that consumers have confidence in the suitability of advice they receive, the FCA said.
The regulator wants to hear views on what more it can do to help the market offer a range of products that meet straightforward investment needs and how people can be better protected from scams.
The FCA is also inviting opinions on how it can use the regulation of financial promotions to make it easier for people to understand the level of regulatory protections they will have when they invest.
It also wants views on how it can help the market to be competitive and what more can be done to ensure people are appropriately and fairly compensated when they lose money because of something a regulated firm has done or failed to do.
The FCA’s interim chief executive, Christopher Woolard, said: “The consumer investment market is not working as well as it should. There have been too many scams and scandals and too often consumers are offered unsuitable products or advice. As a result, many consumers lack confidence in the investment market.
“This call for input is aiming to help shape the future of consumer investments, including regulation, to ensure consumers can have faith in the market.
“We’ll be considering all contributions carefully as we open this debate on the future of the consumer investment market.”
The call follows recent action by the FCA in the market. It previously imposed a temporary ban on the mass marketing of speculative mini-bonds and in June, the FCA announced proposals to make the ban permanent.
In 2014 the FCA launched the Scam Smart campaign to highlight the dangers of investment and pension scams.
The regulator has also taken action against pension transfer advisers where advice has been deemed unsuitable.