The FCA commissioned the Occasional Paper no.17 (the “Paper”) as a means of bringing together the views and opinions from both academics and the FCA in order to stimulate ideas and solutions with the aim of improving access to retail financial services. Instigating this type of conversation plays a part in the wider issues of competition and suitability of products which are areas the FCA is already focusing on. However, the difficulty with this topic goes back the root of financial services – it is a market based system and therefore consumers do not have an automatic right to products and services and in parallel, firms do not have an obligation to provide them. Subsequently, it needs to be carefully considered as to whose responsibility it is to intervene and attempt to improve such access.

The Paper highlights the following three key areas which are causing access issues for consumers:

The maze (process, requirements and eligibility):

  • in general, systems are developed for the “average” consumer and therefore difficulties can be encountered if a consumer has unusual needs which requires a more tailored approach and without this approach their requirements are left unsatisfied;
  • if a consumer encounters an access issue, the lack of and inconsistent communication is leaving consumers unsure on how to overcome their problems.
  • Consumers are unable to find tailored products for their needs at a reasonable cost; and
  • the measures which have been put in place to reduce fraud can be so incumbent and inflexible that it actually makes access either difficult or impossible.

 The fog (market navigation and comprehension):

  • the use of confusing jargon and concepts make products difficult to compare;
  • the use of offers/introductory rates means that the true cost of the product is difficult to comprehend; and
  • it can be difficult to compare products within the market because different providers make the product documentation either easy or hard to find and access. 

The void (physical and digital barriers):

  • with more services offered online, those who do not readily have access to the internet/computers or who have a disability, can subsequently find it difficult to manage money through online financial services;
  • living in rural areas can mean increased difficulty and cost in accessing local branches.

Ultimately, the regulator is not always in the best position to remedy certain barriers to access but as discussed in the Paper, there were a few points highlighted where assistance through regulators could create improvement. For example, all the barriers in relation to the products themselves i.e. creating more tailored products, increase in transparency on costs and price control and clearer information regarding why a product has been deemed unsuitable for a consumer. These issues can serve as an indicator that the market is not working as well as it should which can result in the risk of adverse effects on competition and a poor deal for consumers.

The Paper can be accessed and downloaded here:

If you need any advice on how to create tailored and suitable products for your clients, Cleveland & Co, your external in-house counsel, are here to help.