In a bid to alleviate the strain of the ongoing cost of living crisis, the FCA is vowing to usher in an era of “new enlightenment” for financial inclusion.
FCA CEO Nikhil Rathi mentioned this during his speech at the Scottish Financial Enterprise: Extending Financial Inclusion event in Glasgow.
Rathi expressed the FCA’s dedication towards utilising its authoritative capacity to mitigate the financial hurdles faced by those affected by the crisis, pinpointing pivotal issues like financial literacy, technological advancements, commercial incentives, and sectoral diversity.
Rathi illuminated various challenging aspects emerging in the banking sector that pose additional hardships for the financially ostracised, such as constrained access to cash and non-qualification for credit offerings. FCA CEO Nikhil Rathi stated, “We’ve capped the cost of payday lending, and following recommendations we made 3 years ago, we stand ready to regulate the buy now pay later sector to make sure consumers can continue to benefit from innovation and maintain access to affordable credit, whilst being treated fairly. In the meantime, we secured changes to potentially unfair and unclear terms in the contracts of Clearpay, Klarna, Laybuy, and Openpay.”
Highlighting Scotland’s progressive efforts to enhance numerical proficiency nationwide, Rathi acknowledged that amplified research into AI technology is in the pipeline. This tech is anticipated to offer invaluable assistance to the financially excluded by supervising digital identities and pinpointing areas necessitating support. Moreover, Rathi detailed the regulatory moves made under the Consumer Duty introduced in July, aimed at ensuring firms provide alternatives and accessible products when rejecting customers.
Furthering the FCA’s undertakings, insurers have been directed to abolish loyalty premiums, cap the pricing of high-cost short-term credit, and safeguard savings accounts with advantageous interest rates, all aiming to salvage consumers with low financial resilience £150m annually.
The FCA acknowledges the broad spectrum of its remit and array of powers, but also recognises the limitations and the vital role governments, industry, and consumers play in pulling collaborative levers towards making a significant impact, Rathi concluded.
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