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Leading figures from consumer rights groups and the City of London have joined forces in an unusual coalition, urging the UK chancellor to make financial inclusion a priority for the regulator.
Martin Lewis, the UK’s most high-profile consumer champion, and Charles Randell, the former chair of the Financial Conduct Authority, are among the signatories of a letter sent to chancellor Rachel Reeves on Thursday.
The letter, seen by the Financial Times, said: “A market from which a significant portion of the population is effectively excluded is not working well.”
Pointing out that the Labour government made a manifesto commitment to tackle the soaring cost of car insurance, it said: “There are many other financial services where increasing access and participation would support hard-pressed families and boost the economy.”
Citing the examples of “rainy day savings and affordable credit and household insurance”, the letter said Reeves should “include financial inclusion as one of the financial policy priorities to which the FCA should have regard”.
The letter added that making financial inclusion a priority for the FCA would enable it to seek additional powers to tackle problems in this area and to identify what roles others can play.
“This is absolutely not a finger-pointing exercise,” said Randell, who stepped down as FCA chair two years ago and is now an adviser to law firm Slaughter and May.
“It is about backing the government’s plan to make financial inclusion part of its strategy for growth, working with the regulator and others,” he said.
The Labour party said it would “reinforce consumer protection and financial inclusion” as one of six key priorities outlined in the financial services plan it published at the start of the year.
Randell advised the Labour party on this plan before the July 4 election and is a member of the UK’s Financial Inclusion Commission.
The FCA is required to consider growth and competitiveness as a secondary objective under changes introduced by the previous Conservative government.
Reeves plans to double down on this later this month by telling the regulator in a formal “remit” letter that it needs to prove it is acting to promote the expansion of the UK financial services sector.
The signatories to Thursday’s letter, which include the Citizens Advice consumer watchdog and the Chartered Insurance Institute, want the chancellor to also include an emphasis on financial inclusion in the priorities she sets for the FCA.
FCA chief executive Nikhil Rathi emphasised the importance of financial inclusion in boosting the UK’s growth and competitiveness in a speech last month.
He said Singapore’s position at the top of financial inclusion rankings showed how “a successful global financial centre and financially inclusive economy can go hand-in-hand”.
He added that the UK came seventh in the latest rankings with 1.1mn people in the country without a bank account and 40 per cent of school leavers not passing GCSE Maths.
The FCA is requiring banks to maintain access to cash in places where they have closed all their branches by opening shared banking hubs. It has also pressed banks to raise awareness of no-fee, no-overdraft basic bank accounts that they must provide.
Randell said the regulator could focus more on financial inclusion by looking at whether its rules are pushing people out of certain markets by making the barriers too high for firms to offer services to certain types of customers.
He welcomed Rathi’s recent speech and said: “It’s about more of the same — such as encouraging innovation, supporting credit unions and encouraging firms that don’t offer particular products to show consumers where they can get help”.
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