Financial services firms which offer their products predominantly online could marginalise some consumers, the Financial Conduct Authority has warned.
A new occasional paper said “offline” consumers should get continued access to offline services and should be able to speak to someone in person quickly and easily if necessary.
But it also warned this could mean consumers who use digital financial services are cross-subsidising the more expensive offline services for the benefit of a minority, some of whom may be offline through choice.
“Retail financial services may soon reach a ‘tipping point’ where their delivery to consumers is predominantly online or digital,” the paper stated.
“These changes potentially affect large numbers of consumers. While they deliver benefits for many, there are concerns about access for some consumer groups in this rapidly-changing environment.”
One of the issues the report raises is the closure of bank branches, meaning people who can no longer access advice from their bank do not even have a branch to visit.
In 1988 there were 20,583 branches in the UK, but by the end of 2015 there were reported to be only 8,400 branches.
The UK now has a much lower number of bank branches per head than the US and most other European countries.
One study estimates that almost a quarter of Britain’s remaining bank branches could close by 2020.
The paper did acknowledge that technology and innovation is regarded as an important opportunity to expand financial advice to consumers with modest income and wealth.
However, it also warned against allowing consumers to get caught in a “maze” of impersonal, automated processes.
The paper was written by Sharon Collard, professor of personal finance capability at The Open University, and Jonquil Lowe, a lecturer in personal finance at The Open University, as well as Martin Coppack and Simon Sarkar, who both work in the consumer insight department at the FCA.
The regulator said points expressed in the paper do not necessarily reflect its view, but added the paper was commissioned to prompt a debate, culminating in a range of questions for the watchdog to consider.
Adviser view
Floyd Fombo, a chartered financial planner with Bristol-based Rathmore Financial, said: “The same could be said of any industry.
“If you think about the retail industry, there are still high street shops. It is just a change in how people access services.”
