Treasury committee report on access to financial services

On 13 May 2019, the Treasury Committee published its 29th report on consumers’ access to financial services.

The report urges financial services providers, the Government, and financial regulators to ensure that financial inclusion is a key priority in order to maintain a society that does not leave large parts of society behind.

The report sets out a number of recommendations directed at the FCA, the PSR, the Government and all those in the financial services industry.  These can be summarised as follows:

  • Financial Inclusion
    • all basic bank account providers should relax their opening restrictions immediately;
    • staff training should be put in place to direct consumers rejected from current accounts to basic bank accounts;
    • new bi-annual reporting requirements should be introduced around how many current account openings has been rejected and why;
    • a standardised list of identification for basic bank accounts should be created for all providers, the ID accepted should be increased with more creative types being accepted;
    • financial literacy should be encouraged
    • use of data in encouraging a stop to spending on items such as alcohol or gambling should be explored;
    • the Government and the FCA should consults on use of powers of attorney, the use of carer cards should be explored and encouraged; and
    • a report is required on the effectiveness of the FCA’s third party access principles by the end o the year.
  • Do vulnerable customers pay more?
    • there appears to be inadequate data looking at whether insurers pricing algorithms are compliant with the Equality Act;
    • loyalty penalty – firms should make customers aware of the amount of their loyalty penalty which should be a catalyst for switching, the FCA should put measures in place to make switching easier, firms should be required to publish the size of their loyalty penalties on an annual basis;
  • Bank Branch Closures
    • firms should determine how best to maintain face-to-face banking – seen as a ital. component of the financial services sector; and
    • ATM closures – consumers must continue to have freedom to pay for goods how they choose so free access to cash must be preserved.
  • The Equality Act and the provision of reasonable adjustments
    • the Government should give the FCA the power to enforce the Equality Act;
    • firms must act immediately to ensure that interpretation services are made available to consumers.  These services must be publicised and staff must be trained.
    • The PSR are being asked to confirm whether talking ATMs should be mandatory;
    • The FCA should make all debit and credit cards have tactile markings;
    • Touchscreen chip and pin machines are not acceptable.  The PSR area expected to ensure all PIN pads should have tactile markings;
    • all firms must ask customers proactively what their preferred method of communication is;
    • all firms should ensure that alternative methods of communication (Braille, Moon tactile fonts, large print and audio formats) are available and advertised to all (on all communications and terms and conditions);
    • principles is not working – the FCA needs to set out a minimum requirement rule for communicating with customers;
    • all firms must comply with the European Union Accessibility Act which will set out how accessible banking providers’ websites will need to be;
    • all firms should try to reduce the length of their terms and conditions and reduce the reading age of all communications to that of a 11 or 12 year old; and
    • the FCA should write to all firms to ensure that all of their communications can be read by an average customer.
  • Defining vulnerability
    • the FCA must set clear expectations on how firms should treat vulnerable customers;
    • firms should have procedures to identify consumers’ specific needs without this having to be disclosed;
    • all staff must be trained in how to assist vulnerable customers; and
    • the committee has acknowledged its support for firms having a legal duty of care to act in their customers’ best interests – it has mandated that the FCA must conclude on this point by Autumn 2019.
  • Access to lower-cost credit
    • Local authorities should sign up to the Council Tax Protocol;
    • The CCA should be updated to make payment request letters clearer and easier to understand; and
    • the Government should support the Creditworthiness Assessment Bill.

Caroline Stevenson