We are providing an update on work that we intend to either stop or postpone in light of the ongoing impact of coronavirus and economic conditions. These changes will allow us to focus our resources on the most urgent work where we can make the most immediate difference to consumers and markets.
During the pandemic we have been clear that we remain committed to ensuring that consumers are protected and firms treat their customers fairly. We have introduced a number of measures to ensure firms are clear on their responsibilities, particularly where their customers are vulnerable. This has included support for consumers on mortgage payments, personal loans, credit cards, overdrafts, motor finance and other forms of credit, as well as our draft guidance for firms on the fair treatment of vulnerable customers.
Ensuring markets work well and that consumers are offered fair value products in a digital age is also a priority for us. This includes tackling the loyalty penalty in markets where we see the most harm. As part of this, we are consulting on a package of remedies to stop firms systematically increasing prices in home and motor insurance for loyal customers in the future. Our Mortgage Market Study looked at competition in the mortgage market and we have also published research into mortgage switching and how consumers can be encouraged to seek better deals.
Duty of Care
In our Feedback Statement[1] on Duty of Care and potential alternative approaches we committed to reviewing how we apply the regulatory framework, particularly the Principles for Businesses, and that we would focus on how new or revised Principles could strengthen and clarify firms’ duties to consumers. We said we would do further work to examine the options that are likely to be the most effective and proportionate, so we can understand their likely impact on all areas of our operation, industry and consumers.
In April 2020, we announced that this work was delayed due to the need to prioritise our response to coronavirus and that we had intended to consult on potential options for change by the end of the year. Given current conditions, we are now aiming to consult in May 2021.
Introducing a Single Easy Access Rate for cash savings
In January 2020, we published a consultation paper[3] (CP20/1) setting out proposals to simplify and improve competition in the cash savings market by introducing a Single Easy Access Rate (SEAR).
Our consultation was due to close in April 2020. Due to the impact of coronavirus we extended the consultation period to 15 December 2020, in order to prioritise urgent work with banks and building societies to help consumers during the pandemic.
Given the continuing impact of coronavirus and the low-interest rate environment, we have decided to stop this work. As interest rates for new products fall, so does the gap between rates paid to new and longstanding customers, and the size of the harm falls. We therefore do not consider that introducing the SEAR would be proportionate to the current level of harm in this market. However, we will continue to monitor the market and we may revisit our priorities if we see significant harm to consumers in the future.
Platform exit fees consultation
Our Investment Platforms Market study (2018/19) found that while the market works well overall, there were areas where it could work better. One of these areas was the barrier created by exit fees when consumers try to switch to a platform that better meets their needs.
We announced in Policy Statement 19/29[4] that we would consult on restricting platform exit fees in Q1 2020. However, this was delayed due to coronavirus, with an intention to consult in May 2021; we have now decided to stop work on this consultation.
Since expressing our concerns in the 2018 Interim Report, there has been a marked shift in the market away from exit fees, with at least two major platforms announcing that they would no longer be charging exit fees. The FCA welcomes the direction of travel by the investment platforms sector in phasing out the use of exit fees.
The Exit Fees Consultation was one of a number of remedies to address barriers to switching, including new rules to make moving platforms easier which have already been put in place and come into force in February 2021. We have therefore decided to stop the exit fees work but will be closely monitoring the situation, with the potential to consult on new rules if market changes lead to harm re-emerging in this area.