Regulator launches review into consumer investment market
The consumer investment market is not working as well as it should and it is due a fundamental review, according to the Financial Conduct Authority (FCA).
Too often consumers are receiving lower returns than they should because of “unsuitable products with high fees”, the financial regulator said.
It is launching a “call for input to help shape its work on improving the consumer investment market”.
The FCA’s interim boss 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.”
There has been a growth in retail investors’ use of mass-market investments, with 3.2m consumers now holding £314bn in stocks and shares ISAs.
But the consumer investment market has been struck by a string of scandals, from pensions to the sale of payment protection insurance. The FCA has now said that reform to the market is a key priority in its business plan for 2020 and 2021.
The review follows recent action by the regulator in the market. In June the FCA announced proposals to make its ban on the mass marketing of mini-bonds permanent.
It followed concerns that speculative mini-bonds were being promoted to retail investors “who neither understood the risks involved, nor could afford the potential financial losses.”
Woolard today called on greater clarity from financial services firms who “seem reluctant to provide simple advice and guidance”.
“We need the system as a whole, including regulation, to work better for consumers”, he added.
As part of the review, the FCA is asking for views on how to allow the market to offer a range of products “that meet straightforward investment needs”.
It is also asking how the consumer investment market can be more competitive with firms offering better products and services.