An intelligence-driven culture: how the Financial Conduct Authority will operate

written by Eleanor Lavan on 25/01/2012

It was a full house at the BBA this afternoon, as members collected for a keynote briefing on the Financial Conduct Authority. Those assembled listened keenly to what the seminal shift in regulatory architecture will mean in practice. Speakers emphasised that their perspective, at the top of one of these twin peaks, will look on the industry with a consumer’s eye. But their message was also clear: just because new regulators are prepared to walk a mile in the customer’s shoes, that doesn’t mean that consumers can enjoy a free ride.

So far as the FCA can see, consumers want to know that their money is easily accessible and safely banked in an institution that is honest and fair. Customers don’t want to be hit with hidden or surprise charges. And they want to know that if they have a serious complaint, their bank will take it seriously.

Quite right too. What the FCA wants to make sure is that what they take in from their observation point, standing alongside the consumer, matches what is reported to them by senior bank management. The aim of the FCA is to deliver careful and consistent scrutiny of goods and services, leading to bolder and faster interventions where those goods and services are falling short of the highest standards.

The industry needs to recognise that the products they are selling are complex ones, being purchased by people who aren’t necessarily furnished with financial education; who aren’t necessarily literate in the language that would make potential outcomes of their decisions clear. There needs to be a shift in the communication culture of both regulators and financial institutions that makes transparency a requirement and not a goal.

But there’s a balance to be struck. Past product failures and the crisis itself have whetted the public’s appetite for financial education and indicated the need for its provision. That’s why there are initiatives such as the Money Advice Service and Citizens Advice offering clearly expressed information to those who ask for it. It has to become part of consumer culture that customers make informed decisions and, as Martin Wheatley said today, take responsibility for each transaction.