When the FCA published its Approach to Consumers back in November, I wrote a quick blog (linked below) about the similarities of some of the language to the early years of the FSA.
And said I would come back later to the substance, especially about whether it can be made practical and how well it can balance consistency with the needs of specific situations. This is the first of what I suspect will be several posts on the subject.
One of the most striking things about the paper is how relatively little reference there is to the role of firm supervision or enforcement, and how much reliance the FCA is putting on policy and competition tools. These typically have a bigger impact but are slower to use and, by their nature, are less good at dealing with specific problems.
In tone and general approach, this is again reminiscent of the early days of the FSA. So much so that there is a risk we see a rerun of the tensions that marked those years. For firms, this would likely mean an increase in data requests, and the potential for confusion about the reasons behind some of the FCA’s actions.
Back when it was formed in 1998, the FSA had a dedicated Consumer Division. However this struggled to gain traction with the rest of the organisation, which found it hard to engage with, and its recommendations difficult to apply in practice.
Consequently, after a few years, this was disbanded, and thinking about consumers became "everyone's" responsibility. But there were so many priorities that too often the dedicated thinking about consumers got squeezed out.
The FSA never really managed to escape this tension, and even the major consumer-focused programmes of the next few years - PPI and Treating Customers Fairly (TCF) – proved hard to translate into practical supervisory programmes.
The FCA’s new approach is certainly ambitious - its planned collection and analysis of information is just one example. Putting it into practice would be a challenge at the best of times, doing so when stretched by the pressures of Brexit will be harder still.
Looking ahead, the next stage will be to see how coherently this consumer approach is reflected in the Approach papers for Supervision and Enforcement when they are published in the next few months.
As usual, the twin challenges will be (1) can it be made practical for supervisors and firms? and (2) can it balance the need for consistency with the importance of treating individual cases on their merits? More on these over the coming months as the picture becomes clearer.