FCA: As a regulator it's hard to tell people ‘prices will go up’
Speaking to Ozge Ibrahim on the Inside FCA podcast, executive director at the regulator, Sheldon Mills outlined what the organisation is doing to help consumers with the rising cost of living.
Mills said as the sector prepares for the consumer duty, it can be difficult for the regulator to tell people that prices will go up.
“As firms think about the fair value element of the four outcomes, it is important to think about the lens of rising inflation and increasing prices as they think about the value of their products and services. That said, it doesn't mean that prices won't go up and that's really important,” Mills said.
“Sometimes it's hard, as a regulator, for you to say that to people, your prices will go up. But rising inflation means rising inflation for businesses as well.”
According to FCA research, in May last year 7.8mn people were heavily burdened by their domestic bills and credit commitments - an increase of more than 2mn since 2020.
“It’s clear that some of those cost of living pressures are deepening,” Mills said.
When you start to give forbearance en masse, then you start to sort of mix up the purpose of credit Sheldon Mills, FCA
“The OBR forecast historic falls in living standards through to 2024, and for many, this April will see further increases in energy, water and phone bills, and that's alongside council tax rises.”
Mills said a particular concern for the regulator is ensuring that the firms it regulates, including high cost lenders and debt advice and collection organisations are ready to support their customers “as people face into this crisis”.
“It's important that firms are able to ensure that their systems and the customer journeys that they have, have the right level of people and the right approach so that they're supporting customers, particularly those who are vulnerable or those who might struggle with debt,” Mills said.
He explained that in practice, this means having an appropriate number of staff to answer the phones or respond on webchats to support customers.
“The best firms, particularly those who are lending, will proactively reach into their customer base and let them know of the support that they can access, and will guide them through what that support looks like,” Mills said.
Mortgages
Mills noted that mortgage rates have been a particular concern for the FCA throughout the current crisis.
