FCA calls for input on retail investment sector “not working as it should”
The UK’s Financial Conduct Authority (FCA) has launched a call for input on the UK’s consumer investment market.
The FCA is aiming to increase customer trust and improve competition in the sector.
The watchdog identified reducing harm in the investment market as a priority in its 2020/21 business plan.
The FCA is seeking input from the market to guide it on improving things.
Among its questions, the FCA wants to know how it can simplify messaging to help people understand the level of regulatory protections available to them.
It also asks what more it could do to help and compensate those who lose money to scams.
Scandals rank highly among the FCA’s concerns. It asks how it can protect investors from fraudulent investment products and companies.
According to FCA data, there are 5,000 advice firms and over 27,000 advisers in the UK investment sector. The regulator describes it as both a complex and diverse market.
In a 2019 market study, it found that since 2013 the investment platform market had doubled to £500 billion assets under administration.
“Consumers can find it difficult to shop around and choose a suitable platform based on price,” it wrote in the report.
“Charging structures can be complex with many different fees and charges, with different language used to describe similar fees across platforms.”
A lack of confidence
FCA interim chief executive, Christopher Woolard, says 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,” he adds.
This isn’t the first move the FCA has made in the investment sector. In June it moved to permanently ban the marketing of mini bonds to retail investors.
Mini bonds are loans to small businesses popular with some investors as they promise high rates of interest to mitigate their risk.
“This call for input is aiming to help shape the future of consumer investments,” continues Woolard.
“We’ll be considering all contributions carefully as we open this debate on the future of the consumer investment market.”