Public Accounts Committee: The FCA should set out what more it will do ensure firms check consumer understanding of the products they purchase and of their rights to claim compensation.
The regulator has become overly focused on checking financial services firms adhere to detailed rules and is neglecting its duty to check customers understand the products they are buying.
A report published by the Public Accounts Committee criticised the regulator for failing customers.
It said: “The FCA does not do enough to ensure that consumers understand the financial products they are buying and the possibility of claiming compensation.
“Financial services are complex to understand, even for the most knowledgeable consumers, and this can mean that consumers in this market are particularly susceptible to mis-selling.
“As conduct regulator, the FCA aims to protect consumers.”
However, research by the National Audit Office found that the FCA emphasises ensuring that firms “adhere to detailed rules, rather than ensuring that firms do enough to check that customers fully understand the products they buy”.
The committee report added: “Consumers also need to be aware that they may be eligible for compensation when mis-selling has occurred.
“The FCA should set out what more it will do ensure firms check consumer understanding of the products they purchase and of their rights to claim compensation, particularly for vulnerable consumers, and report back to us on this work in a year’s time.”
