Britain’s Financial Conduct Authority (FCA) has instituted a new consumer obligation designed to provide consumers with greater protection when dealing with companies in the retail financial markets.
While the FCA already has consumer protection rules for these companies and notes that many of them “deliver the right results for consumers,” the watchdog group said on Friday it saw evidence of harmful practices.
This includes companies providing misleading or hard-to-grasp information, which makes it more difficult for consumers to properly rate the product or service.
“This may give an idea of why one in four respondents to the FCA’s 2020 Financial Life Survey said they lacked confidence in the financial services industry, and only 35% of respondents agreed. that companies are honest and transparent in their dealings with them, ”the authority said in a press release.
The FCA says it is proposing an extension of its rules to ensure a higher and more consistent level of consumer protection.
The new consumer obligation, which businesses will follow or risk taking regulatory action or even enforcement investigations, requires businesses to take “all reasonable steps to avoid foreseeable harm to customers” and to “allow customers to pursue their financial goals and act in good faith. . “
The FCA published a study earlier this year which found that young traders are increasingly engaging in risky investments without realizing the consequences.
The group’s research looked at how and why people invest in cryptocurrency and foreign exchanges and found that many of these investors are younger, more diverse, and comfortable with riskier offers. They were also motivated to invest in part because of the accessible investment applications.
But there is significant evidence that these investments are not the best solution for less experienced investors, with more than half of those polled saying a loss would negatively affect their lifestyle.
Last year, the FCA tightened its rules governing payment companies following the collapse of Wirecard AG, which excluded millions of customers from their accounts.