Prioritisation and sequencing: FCA doubles down on savings rates - and says Consumer Duty enforcement is coming

FCA Chair Ashley Alder and CEO Nikhil Rathi just appeared before the Treasury Committee.  They reported on various areas of interest including debanking, investment trust disclosure requirements and the inquiry into Sexism in the City.  

Perhaps most interestingly, they doubled down on savings rates as a hot-button issue.  They reiterated their clarion calls for further work (and supervisory engagement) in this area.  And they espoused a pragmatic and proportionate approach to Consumer Duty enforcement (the proof, of course, is in the pudding).

Here are the highlights.

On the Consumer Duty, proportionate enforcement

The Committee offered the FCA the beginnings of challenge on its Consumer Duty enforcement work.  

But Rathi wouldn’t be drawn.  

He emphasised the FCA’s “proportionate” approach.  It will allow the Consumer Duty to “settle in over the coming period” and give firms time to remedy issues it identifies.  Some firms are making efforts; for others there will be more “intense” supervisory engagement.

And the FCA won’t “seek to enforce every technical breach”.  Instead, it will “go after the most egregious harms”.

All of which means that enforcement “will come some way down the track”.  But don’t get complacent.  The train is coming, even though it’s closer for some than others.

On savings, much progress but more to do

The FCA made a well-timed splash the morning of the Treasury Committee hearing. It wrote to firms about its disapproval of “double-dipping” in pensions and investments – i.e. both retaining interest and charging for holding cash.  A step that Rathi was quick to highlight.

He also touted the considerable increases in cash savings rates since the FCA became more active in the area.  See its 31 July 2023 review of the cash savings market and 14-point action plan and its 6 December 2023 update.  About £100bn in easy access deposits have shifted to notice deposits.  And there are many more accounts offering over 4% interest (how much of this is just down to market movements is - perhaps inevitably - unclear).

But the FCA says there’s more to be done particularly on off-sale products and closed book products.

So savings rates will remain a key focus area.  Perhaps here, in particular, the enforcement train will shortly arrive?