The FCA’s Risk Outlook reiterates their focus on culture and behaviour but fails to set out a constructive long term vision for the UK’s savings and protection market.
KPMG’s head of conduct risk, Tim Howarth, commented: “While the seven key areas of focus are sensible, the industry will read the outlook as more of a laundry list of future enforcement issues. Disappointingly the paper overlooks the ticking time bomb of the UK’s savings gap and the industry has no additional certainty about what the FCA would like the market to look like in five years."
“The recent annuities story has highlighted that the average retirement pot is too small. At the same time coverage for protection products is too low. The industry needs the FCA to articulate its vision in this area, so that steps can be taken to close these gaps."
“Undoubtedly the biggest surprise comes from the FCA’s business plan, also published today, announcing a review of insurance policies dating back to the 1970s. This has already had a profound impact on the market, which is still processing the implications of the annuities changes announced in the recent budget."
“The document affirms that the FCA’s direction of travel for the short term has been set and its mantra is restoring trust in the sector, which will be welcomed by customers and the industry itself. It is clear that products that are not designed with customers’ true needs in mind will not be tolerated and the FCA is clearly not afraid to show its teeth."
“However the financial services industry is seeking clarity. Therefore, if the FCA outlines its long-term expectations, the industry can set its long-term strategy, define its risk appetite be able to deliver the right products, at the right price and at the right time to customers - without the constant concerns of an ever-changing regulatory landscape. This would be good for the economy, consumers and shareholders.”
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.