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MPs probe whether financial services are fair to consumers

Paloma Kubiak
Written By:
Paloma Kubiak

An influential group of MPs has launched an inquiry looking at consumers’ access to financial services, particularly the experience of those considered vulnerable in society.

The Treasury Committee will look at whether certain groups of consumers are excluded from getting a basic level of service from financial firms. It will also scrutinise whether vulnerable people pay more to access financial products.

The Committee will consider whether financial providers should have a ‘duty of care’ scheme in order to protect vulnerable consumers and whether the recent spate of branch closures lead to financial exclusion.

Other areas which will be probed include how financial providers deal with Power of Attorneys and the role of technology in helping people who can’t physically access services.

Rt Hon. Nicky Morgan MP, chair of the Treasury Committee, said: “Vulnerability, as defined by the FCA, is where someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

“With customers expected to take more responsibility for their financial planning and resilience, bank branches closing, and the number of free-to-use ATMs falling, it’s becoming increasingly difficult for vulnerable customers to access certain financial services.

“The Committee will examine the practicality of the FCA’s definition, the effectiveness of attempts by financial services providers to prevent increased financial exclusion, and whether a premium is placed on products such as travel insurance for vulnerable consumers.”

‘Not always obvious when someone is vulnerable’

Tom Selby, senior analyst at AJ Bell, said ensuring vulnerable and potentially vulnerable customers are identified and protected is one of the most important challenges facing the financial services industry today.

“Although there are some customers who may be more obviously vulnerable – such as those diagnosed with Alzheimer’s – anyone can potentially become vulnerable at any time.

“It’s not always obvious when someone is vulnerable. Many people suffer for long periods with debilitating depression, for example, without even their closest family knowing.

“Tackling vulnerability therefore cannot be dealt with by any one company or industry in isolation. It requires broad collaboration between firms, regulators, politicians, charities and customers themselves.”