PDF Access to Financial Services in the UK - FCA

Access to Financial Services in the UK

May 2016

Occasional Paper 17

Encouraging debate among academics, practitioners and policymakers in all aspects of financial regulation.

Financial Conduct Authority .uk

Occasional Paper 17

Access to Financial Services in the UK

FCA Occasional Papers in financial regulation

The FCA is committed to encouraging debate on all aspects of financial regulation and to creating rigorous evidence to support its decision-making. To facilitate this, we publish a series of Occasional Papers, extending across economics and other disciplines. Occasional Papers contribute to the debate on specific issues relevant to the FCA's work. The main factor in accepting papers is that they should make substantial contributions to knowledge and understanding of financial regulation. In order to stimulate interest and debate, the FCA welcomes the opportunity to publish controversial and challenging material. If you want to contribute to this series or comment on these papers, please contact insight@.uk.

Disclaimer

Occasional Papers contribute to the work of the FCA by providing rigorous research results and stimulating debate. While they may not necessarily represent the position of the FCA, they are one source of evidence that the FCA may use while discharging its functions and to inform its views. The FCA endeavours to ensure that research outputs are correct, through checks including independent referee reports, but the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that Occasional Papers contain any errors or omissions, including as to the content or effect of legislation, they should be attributed to the individual authors, rather than to the FCA.

These Occasional Papers are available on our website: .uk. Comments are welcome; please address them to the authors listed below.

Authors

Sharon Collard, Martin Coppack, Jonquil Lowe, & Simon Sarkar.

(Authors' names appear in alphabetical order.)

Biographical note

Sharon Collard is Professor of Personal Finance Capability at The Open University and Jonquil Lowe is a Lecturer in Personal Finance at The Open University. Martin Coppack and Simon Sarkar both work in the Consumer Insight Department at the FCA.

Acknowledgements

This paper has benefited from comments and assistance from colleagues at the Financial Conduct Authority. We especially thank Jo Hill, Jonathan Phelan, Attricia Archer, Jenny Barrow, Gareth Thomas, Richard Bennett and John O'Hara for their expert guidance, comments and support for this paper. Linda Woodall deserves a special thank you for her passion for this topic and enduring support throughout.

We thank Reader Carol Brennan from Queen Margaret University for reviewing the paper as an academic expert in the field of consumer policy. Thanks also go to Cara Bloomfield, Laura Williams, Michelle Poku, Nikki Hall and David Graham for providing a thorough consultation process and ensuring deadlines were met.

As authors we have relied heavily on the primary research the FCA commissioned to understand what it is like to be excluded from financial services. Thank you Becky Rowe and team at Revealing Reality (ESRO) and to the people and organisations who took part in their research.

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Occasional Paper 17

Access to Financial Services in the UK

Finally we thank contributors from consumer organisations, trade bodies and firms for their help and assistance too. A list of organisations consulted as a part of this work can be found in Appendix 1.

All errors are our own. We welcome feedback on this paper, via contact with the authors. Please contact Martin Coppack (martin.coppack@.uk 020 7066 6064).

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Occasional Paper 17

Contents

Access to Financial Services in the UK

Foreword

Executive summary

1 Introduction: why is access an issue?

1.1 Access, financial exclusion and consumer vulnerability 1.2 Why is access to financial services important? 1.3 Getting access right: whose role is it? 1.4 Why should firms be interested in access?

2 Access: what role could regulators play?

2.1 The FCA's Competition Objective 2.2 The FCA's Consumer Protection Objective 2.3 The FCA's public sector equality duty 2.4 Access: what is the FCA's function?

3 Research methods

3.1 Desk research 3.2 Qualitative research

4 Digital transformation

4.1 Context 4.2 Current regulation 4.3 Issues 4.4 Through a consumer's eyes: what might good look like? 4.5 What is happening so far?

5 Compliance and crime prevention

5.1 Context 5.2 Current regulation 5.3 Issues 5.4 Through a consumer's eyes: what might good look like? 5.5 What is happening so far?

6 Automated processes

6.1 Context 6.2 Current regulation 6.3 Issues 6.4 Through a consumer's eyes: what might good look like? 6.5 What is happening so far?

7 Segmented markets

7.1 Context 7.2 Current regulation 7.3 Issues 7.4 Through a consumer's eyes: what might good look like? 7.5 What is happening so far?

5

7

21

22 26 29 30

32

33 33 35 36

40

40 41

43

43 44 45 51 52

58

58 59 63 69 70

75

75 78 79 85 85

89

89 94 95 101 101

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Occasional Paper 17

Access to Financial Services in the UK

8 Ageing population

106

8.1 Context

106

8.2 Current regulation

108

8.3 Issues

109

8.4 Through a consumer's eyes: what might good look like?

115

8.5 What is happening so far?

116

9 From issues to solutions

119

9.1 Identifying the issues

119

9.2 Driving change

120

9.3 Indirect effects

123

9.4 From issues to solutions

123

9.5 A way forward?

131

9.6 Concluding remarks

132

References

133

Appendix 1: Organisations engaged as part of the FCA's access programme 154

Consumer organisations

154

Industry Representatives

154

Other

155

Appendix 2: Research methods

156

Consumer sample and recruitment

156

Interview approach

157

Additional interviews

158

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