The Financial Conduct Authority (FCA), once thought to be the consumer’s valiant knight in shining armour, has once again dashed such naïve hopes. In a brazen display of priorities, Sarah Pritchard, Executive Director of Markets and International, took to the stage at The Investing and Saving Alliance’s annual conference with a speech that can only be described as an ode to corporate self-interest thinly veiled as public service.
The FCA has apparently decided that the best way to address public distrust in financial products is not by rooting out bad actors or ensuring suitability—oh no—but by blaming consumers for their reluctance to dance with the devil. According to Pritchard, the UK must “develop a stronger investment culture.” Translation: the public needs to stop avoiding financial products like the plague. Clearly, decades of scandals, mis-sold products, and outright scams haven’t done enough to sully the industry’s reputation—so let’s double down, shall we?
Suitability Rules? What Suitability Rules?
Remember when the FCA’s role was to ensure financial products were sold appropriately, protecting consumers from the sharp fangs of the market? That quaint notion seems to have flown out the window. Now, the regulator wants to encourage more product sales while simultaneously watering down suitability rules. They’re working on a proposal to make it easier for companies to flog products without pesky conversations about whether they’re actually right for the buyer. Because who needs transparency when profits are at stake?
And what of their shiny new toy, the “secondary growth objective”? It’s as if someone took the phrase “conflict of interest” and turned it into a policy. The FCA’s revenues are tied to the size of the financial market, meaning their coffers swell every time someone buys another product they don’t understand or need. Now they want to extend auto-enrolment—a scheme that has already vacuumed money out of workers’ paycheques before they even see them—into savings. Of course, they frame it as “boosting financial resilience.” Sure, resilience. For the City, not the people.
Human Capital? Never Heard of It.
Pritchard’s speech also revealed an astounding blind spot: the FCA doesn’t understand human capital. For those unfamiliar with the term, human capital is the future value of an individual’s earnings—arguably the most significant component of wealth for most people. The FCA admits it has “no direct tools” to help increase incomes. Instead, their big idea is to ignore the core component of financial resilience and focus on shoving more financial capital products down the throats of a public already struggling with stagnant wages and rising costs. Who needs income when you’ve got a glossy brochure for an ISA?
Financial Education, FCA Style
Another jewel in the FCA’s crown of contradictions is their desire to meddle in financial education. Apparently, they think the solution to years of consumer distrust is to “boost financial capability” with education campaigns that sound suspiciously like marketing for financial products. The idea of regulators, whose revenue model depends on product sales, having a hand in education is as laughable as it is alarming. If there isn’t already a brick wall between education and sales, it’s time to start laying the foundations.
Lip Service to Integrity
Of course, the speech was peppered with the usual platitudes about “market integrity” and “inclusive growth.” Pritchard spoke of consumer duty rules as if they’re a groundbreaking innovation, rather than basic protections the FCA should have enforced properly all along. And let’s not forget the obligatory nod to innovation and technology, because nothing says “consumer protection” like shiny new products no one asked for.
What’s Next?
The FCA’s current trajectory is deeply troubling. Instead of addressing the root causes of financial exploitation, they seem intent on aligning themselves even more closely with the industry they’re supposed to regulate. Their latest moves will likely embolden bad actors, weaken protections, and leave consumers more vulnerable than ever.
At a time when financial crime accounts for half of all UK offences, and public trust in the financial sector is at rock bottom, the FCA should be redoubling its efforts to restore integrity. Instead, they appear to be throwing gasoline on the fire. If this is their vision for a stronger investment culture, one shudders to think what a weaker one might look like.
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