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Industry urged to help vulnerable access financial services

Industry urged to help vulnerable access financial services

MPs have warned vulnerable adults are at risk if the UK becomes a cashless society as they urged the industry to step up its game on financial inclusion.

As part of its report on consumer access to financial services published today (May 13), the Commons Treasury select committee stated the UK "risks inadvertently becoming a cashless society", which would have "stark consequences" for a large portion of society. 

Evidence received by the committee had made clear that certain groups who are likely to be more vulnerable, such as older consumers or those on lower incomes, are more likely to be impacted by bank branch closures.

The increasing use of mobile and online banking channels is one of the main drivers forcing the closures of high street branches, it stated.

However, the report highlighted the rise in IT failures and "the inability of financial services providers to serve their customers digitally during such service failures" as a strong rationale for why a physical bank presence cannot be entirely replaced. 

Referring to a previous report on access to cash, the committee stated 17 per cent of the UK population—more than 8m adults—would struggle to cope in a cashless society. 

The Financial Conduct Authority (FCA) and government could be forced to intervene should banks and financial services providers remain "unwilling to innovate" to halt the closure of branches and offer a physical network for consumers. 

Nicky Morgan, chairwoman of the Treasury committee, said: "The importance of financial inclusion cannot be understated. As the World Bank said recently, there can be no end to poverty without financial inclusion.

"And as Eleanor Southwood from the RNIB told the committee, financial inclusion is about independence, protection from financial abuse, and confidence.

"The financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority for financial services providers, the government, and financial regulators.

"It can no longer be an option for banks to ignore financial inclusion."

Meanwhile, the report recommended the FCA issues guidance to all financial services providers instructing them to ensure that all their communications with their customers—especially terms and conditions—are written in language that an average consumer can read and understand in full. 

In addition, the committee stated the regulator should "set clear expectations of how financial service providers should treat vulnerable consumers", through the guidance it plans to publish across all the sectors that it regulates.

It added that the new vulnerability guidance should include specific requirements such as the level of training financial services staff should be required to have, and what and how adjustments should be offered.

Ms Morgan said: "A patchwork of improvements and adjustments have been targeted at some groups of consumers, but the basic level of access is still not universal. There are significant areas of concern where vulnerable consumers are effectively excluded from participating with financial services providers.