Financial watchdog to investigate plans to focus on 'vulnerable consumers'
The financial watchdog will investigate whether it should train its focus on the plight of consumers amid a backdrop of soaring compensation claims for mis-sold products.
The Financial Conduct Authority said it had a duty to take action to protect "vulnerable consumers" by preventing pensioners being hit by financial scams or rooting out products which could harm people on low incomes.
It said it also had a responsibility, alongside the Financial Ombudsman Service, to ensure consumers are handed compensation - or have their disputes resolved - in a cheaper way than going through the courts.
The scrutiny of its approach is part of a far-reaching consultation on the FCA's "mission" - designed to draw-up a set of principles for guiding its future strategy.
Andrew Bailey, FCA chief executive, said the UK had suffered a financial "conduct crisis" in the last decade, leaving a "very sorry history" in its wake.
"Four of the more prominent headings for this conduct crisis are: retail products, most notably payment p rotection insurance (PPI); wholesale market products, most notably LIBOR and the FX market scandals; the sale of products to corporates, such as interest rate hedging products; and areas of financial crime, involving money laundering and the breach of financial sanctions.
"This is a very sorry history, and the future needs to be radically different from the past. We owe this to the public who are the consumers of financial services."
The FCA's review will seek feedback on a range of issues, including the protection of consumers, consumer redress, the scope of regulation, the interaction between regulation and public policy, and competition and enforcement.
"Establishing and embedding a clear mission for the FCA is critical to our success, both as a regulator and to UK financial services as a whole," Mr Bailey added.
"Our mission will set out a framework within which we prioritise our work, ensuring we focus our resources in the right places. This will improve accountability and transparency of how and why we make the choices that we do."
The announcement comes as Justin Welby, Archbishop of Canterbury, called on financial watchdogs to shore up their standards amid claims that the regulation for preventing another financial crisis is weakening.
Mr Welby was backing a report by think tank New City Agenda calling on the FCA, the Prudential Regulation Authority and the Bank of England to improve their regulatory culture.
Lloyds revealed on Wednesday that it had set aside a further £1 billion to meet compensation claims for the mis-selling of PPI, bringing its total compensation bill to £17 billion.
The banking industry's PPI bill already stands at more than £30 billion.
Prime Minister Theresa May vowed to stand up for "ordinary working class people" at the Conservative party conference earlier this month because they faced stagnating pay, job insecurity and unaffordable housing and wages.
The FCA regulates around 56,000 firms in the UK.
Tory MP Andrew Tyrie, chairman of the Commons Treasury Committee, said the FCA's "mission" consultation document looked like a robust attempt to give the watchdog a much clearer sense of direction.
He added: " It also attempts to identify what the FCA cannot reasonably be expected to do. Both are certainly needed. So is the greater transparency about its decisions and choice of priorities, promised in the FCA's consultation document.
"The FCA now has a responsibility to do much better than their predecessor regulator, the FSA. And Parliament has a responsibility not to make the regulator's job impossible by imposing unreasonably heavy demands on it."