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MPs to probe consumer access to financial services

MPs to probe consumer access to financial services

The Treasury Committee has launched an inquiry into consumer access to financial services, focusing in particular on the interaction between vulnerable consumers and financial services firms.

The committee seeks to scrutinise whether certain groups of consumers are excluded from obtaining a basic level of service from financial services providers.

It will also examine whether vulnerable consumers pay more for financial services products than others.

Nicky Morgan, MP and chairman of the committee (pictured), said: "Vulnerability, as defined by the FCA, is where someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

"With customers expected to take more responsibility for their financial planning and resilience, bank branches closing, and the number of free-to-use ATMs falling, it’s becoming increasingly difficult for vulnerable customers to access certain financial services."

The Financial Conduct Authority has come up with a definition for what constitutes a vulnerable consumer and confirmed this in July this year.

The FCA defines a vulnerable person as being "someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care".

The regulator has advocated the creation of policies that ensure indicators of vulnerability are spotted and responded to in a considered manner. This includes ensuring front-line staff can spot signs of stress, grief or depression, and know how to respond.

Ms Morgan said: "The committee will examine the practicality of the FCA’s definition, the effectiveness of attempts by financial services providers to prevent increased financial exclusion, and whether a premium is placed on products such as travel insurance for vulnerable consumers.

"As part of this inquiry, we’ll be holding sessions outside of Parliament to hear from vulnerable consumers who have interacted with financial services providers."

The committee will seek to find out how financial services providers should define ‘vulnerability’ and consider the merits of having a ‘duty of care’ for providers.

It wants to find out how providers respond to consumers affected by bank branch closures and how they evaluate the systems and controls in place for Power of Attorney.

It will also look at how providers comply with equality legislation and the mechanisms for enforcement and how they themselves are being held to account for how they treat vulnerable customers.

The committee will also look at products, how vulnerable consumers are introduced to products and whether they face higher costs.

Mel Kenny, chartered financial planner for London-based Radcliffe & Newlands, said: "This is a tricky one. Whilst vulnerable consumers are susceptible to either paying a lot more for what they need or for what they don't need by opportunists, when it comes to taking regulated financial advice, because a lot more time may be required in helping them understand everything, they may have to pay more than the cost of standard advice.

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