If you want to complain about a financial services provider, there’s a bewildering array of regulators and industry bodies to choose from. From the FSA to the FLA and OFT; it’s an absolute alphabet soup of acronyms.
Isn’t it about time we were given a clear route to seek redress, with a powerful financial regulator that steps in before things go wrong?
Here’s a relatively simple example to show just how complicated things can get. Imagine I’ve chosen to use a claims management company (CMC) to put in a claim relating to mis-sold credit card payment protection insurance (PPI). The question is: ‘Who polices this market?’
Well, CMCs are regulated by the Ministry of Justice (MoJ), while credit card providers come under the Office of Fair Trading (OFT) and the Lending Standards Board. Oh, and PPI is within the Financial Services Authority’s remit. And then there are trade bodies and the companies themselves. If I want to pursue a complaint further, there’s the Financial Ombudsman Service (FOS). It’s all too confusing.
This spreads into day-to-day banking as well. If my bank account is in credit, it’s regulated by the FSA, but if I’m in the red, the OFT and the Lending Standards Board get involved too.
Financial complaint confusion – what’s the answer?
The first step towards a solution is to bring the OFT’s consumer credit powers into the remit of the FSA’s replacement – the Financial Conduct Authority (FCA).
We need one strong regulator for all credit firms, from overdrafts to payday loans to debt management companies. A well-resourced and powerful regulator could bring about real change, including the ability to ban harmful products altogether.
A government consultation last year considered the merits of transferring responsibility for consumer credit regulation to the FCA. At the start of the consultation the government said:
‘Transferring consumer credit regulation from the OFT to the FCA provides an opportunity to significantly improve the way consumer credit is regulated and to create a simpler, more responsive regime.’
The good news is that the government has now announced that it’s going to do just this. But we want this change in regulation to go further and genuinely improve consumer protection. The FCA needs to be given the powers that will make it a truly strong regulator – or a Watchdog, not a Lapdog.
Until this happens, too many of us will give up in frustration when we try to submit a complaint. And questionable industry practices will continue to slip through the gaps – gaps that a strong regulator would have the power to close.
What powers do you think the new regulator should have? And which parts of the financial services industry should it sort out first?
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