British financial regulators have admitted that after years of “too many frauds and scandals”, rules on selling investments should be changed to restore consumer confidence.
In a request for ideas on improving the way savings products and advice are provided, the Financial Conduct Authority recently requested comments on several processes that have contributed to notable losses.
This includes “financial promotion rules. . . “To make it easier for people to understand the level of regulatory protection they provide.” Critics say it must be addressed after thousands of investors lost £236m from collapsed mini-bond issuer London Capital & Finance. protect.
Another area where more work may be required is getting investors to “understand the risks they are taking”. Of the 300,000 people who lost money at the Woodford Equity Income Fund last year, many said they couldn’t.
According to the FCA’s request for comment, there is a need to reshape the entire future of consumer investment “including regulation so that consumers can have faith in the market”.
The right to report that FCA cannot stop all fraud
Interim CEO Chris Woolard said: “’The consumer investment market is not working properly. There were too many frauds and scandals, and inappropriate products or advice were offered too often to consumers.”
The campaign group has repeatedly accused regulators of failing to prevent investors from taking financial damage or provide victims with adequate remedies.
Earlier this year, once Brexit activist Injinna Miller tried to stop the appointment of former FCA president Andrew Bailey as governor of the Bank of England because of “the accusations of a financial scandal” while working for the regulator.
The proposal that the FCA’s complaint handling plan could limit the payable compensation limit to £10,000 is currently opposed by the Campaign Group Transparency Task Force and the Connaught Action Group.
However, the FCA’s acknowledgment of the need for change was welcomed by Hargreaves Lansdown’s investment platform, which has led many to invest in the Woodford Fund.
“The purpose of the broad input request from regulators is clear,” said Nathan Long, Policy Director at Hargreaves. They ensure that people can better navigate financial services to invest for the future, and that they get the help that is right for them. I’m working hard.” .
“FCA reserves the right to report that all fraud cannot be prevented. With instruction level. . . Information will improve and people’s own resilience to fraud will improve. Because you can notice cases where something is so good that it cannot be called true,” he added.
Anthony Morrow, co-founder of financial advisor OpenMoney, said he was grateful for the FCA’s request for comment, especially as the number of reported financial frauds increased due to the epidemic. “We need to stop blaming individuals for buying products that are too complex or dangerous, and simplify the products we offer. . . This allows investors to make better informed financial decisions,” he said.
In the FCA’s 2020/21 business plan published in April, reducing the damage to the consumer investment market was a priority. We are also working on new consumer initiatives to help investors make better informed decisions based on the ScamSmart campaign launched in 2014.
The new campaign seeks to highlight the harm that can be caused by investing in high-risk, high-yield, liquidity investments that are not suitable for the financial needs of investors.
Consumers wishing to respond to requests for comments have been asked to send comments through a form on the FCA website by December 15th. All feedback will be used to plan the agency’s work over the next three years.
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