When approached thoughtfully, financial inclusion can catalyse productivity and growth, says Nikhil Rathi, Chief Executive at the Financial Conduct Authority (FCA).
During Stepchange Connected 2024, Rathi addressed the financial challenges that consumers have encountered in recent years. The FCA has positioned regulation as mitigation for negative impacts.
For example, in 2023, the authority banned debt advice providers from receiving referral fees from debt solution providers. This ban was in the interest of consumers, protecting them from debt packagers acting in their own monetary interest.
Achieving a credit market that serves a variety of consumers, especially those that struggle to access credit, is a process the FCA is actively working on collaboratively with the Government and Fair4All Finance.
Rathi explains that even with these progressions, identifying the root causes that prompt regulatory activity should maintain importance, reinstating the topic of Consumer Duty.
“The Consumer Duty entails a change in philosophy and fewer new rules.
“With it now fully in force, it is timely to consider whether there are rules we should review to reduce burdens and duplication, delivering good outcomes whilst maintaining appropriate protection,” says Rathi.
In July of this year, the FCA reported its new secondary international competitiveness and growth objective. An aspect of this goal is focused on boosting financial inclusion.
“We must now go further and look at fixing the foundations of our economy and financial system that made these interventions necessary,” Rathi adds.
“There appears to be a link between higher economic growth and increasing financial inclusion, with gaps in our understanding of how that link works and its direction.”
Rathi explains that understanding the link between bolstering financial inclusion and economic growth will require a change in mindset. This means, valuing what customers truly need.
Ensuring that financial education begins early and continues throughout a person’s career is a key suggestion for addressing this shift. The progression of digitalisation and constant technological innovation should be embraced as well as understood.
Rathi explains that this mindset is “the way our society will thrive, our economy will grow, and how we will ultimately protect consumers in the long-term.”