The Financial Conduct Authority’s Sector View 2020 is an interesting document – the gift that keeps on giving
The more the report is delved into, the more interesting nuggets are dug up. Last week, we revealed the City regulator was equating unsuitable advice in retirement with advisers’ desire to get a good price for their business when they sell up and retire.
This week, the document yielded interesting developments in the mortgage market, with the FCA expressing concern over the once-lauded Help-to-Buy scheme and warning of the potential increased risk of negative equity affecting those first-timers buying a new-build home under the scheme.
And further exploration of the document revealed the FCA warning against complexity and the potential for consumer harm over protection products, such as income protection – even though the regulator does not have lien over the healthcare protection arena – yet.
Instead, the FCA commented that it is up to the industry (read ‘advisers’) to ensure customers understand the products and up to providers to make sure the products are fairly priced.
This could be seen as the FCA giving a warning to those advisers who do fall under its remit to do more to protect customers against potential detriment.
It could also be read as the FCA collating data on a part of the financial services market that it currently does not regulate, perhaps with a view to bringing this under its grey umbrella in the future.
Given what has happened with mortgages, claims management companies and personal lines cover, it is not too far beyond the realms of human imagination to see the regulator take protection into its purview and remove commission-based payments from that product, too.