Why do customers contact the financial regulator? Latest data revealed!

The Financial Conduct Authority (FCA) has released its latest Data Bulletin. This edition focuses on insights from its Consumer Contact Centre – and we thought it would be useful to share some of them. They provide an interesting snapshot of consumers’ current financial services concerns.

The contact centre is the main point of contact for financial services consumers wanting to get in touch with the regulator. Most of the queries received are handled by the contact centre itself, while around a third are directed to other bodies such as the Citizens Advice Bureau or the Money Advice Service.

The data in the bulletin covers the 12 month period from 1 December 2015 to 30 November 2016.

Why have consumers been contacting the FCA?

The three top reasons are revealed to be queries about:

  • firm registrations
  • customer service issues
  • scams or potential scams

36% of enquiries were to check on the FCA rules or to check on the status of firm to see if it was regulated by the regulator.

15% were about customer service, including issues with contacting firms, claims handling and arrears/repossession issues.

13% of calls were to report or ask about scams or potential scams.

When it comes to subject matter, consumer credit was the largest single product category – 17% of queries related to consumer credit. 14% were enquiring about investment products and 13% about both scams and general insurance.

A broad ‘other’ category encompassed queries covering pensions and retirement products, mortgages, payment services and life/health insurance issues. 17% of queries did not relate to any particular product.

Source: FCA

Source: FCA

 

What are the biggest concerns for each area?

The Bulletin gives a detailed analysis of the top five subjects consumers contact the FCA about.

Here we look in more depth at three of these: consumer credit, investment products and general insurance.

Consumer credit

  • Queries about payday loans have reduced dramatically since the FCA took over regulation of the sector in 2014 – down from a peak of 400 a month in late 2014 to around 50 a month in late 2016. The report puts this down to a general shrinkage in the market, plus improved standards following FCA regulation.
  • Most enquiries (39%) are to check on a firm’s authorisation status and on regulatory rules.
  • 17% relate to advising and selling.
  • 13% are about customer service, including documentation, treatment of customers and data protection issues.

Investment products

  • The largest number of enquiries was about binary options – an investment product, ironically, that the Authority does not regulate.

Binary options are a type of bet where a consumer tries to predict the outcome of a financial markets event with two possible outcomes. They are classified as gambling rather than a financial product in the UK – hence they fall out of the FCA’s scope.

  • Most investment enquiries were to check whether the firm in question was authorised.
  • The report puts this down in part to the current low interest environment, which may see potential investors looking outside traditional products and providers in order to increase their return.

General insurance

  • 30% of enquiries related to status and regulation – a jump from the previous year. Claims handling concerns accounted for 21% of calls, with 19% relating to advising and selling.
  • The general insurance sector came under the regulator’s spotlight last year, when its thematic review of the sector was published. We looked then at how firms that delegate or outsource work can up their game to avoid falling foul of the regulator’s rules.

Conclusions

It’s always interesting to examine the reasons why sectors, firms and products come to the regulator’s attention.

With clarification on whether firms are genuine, or regulated, and confirmation of the FCA rules, topping the list of reasons why consumers get in touch, firms need to ensure they are delivering on the regulator’s expectations.

Source: Perivan Technology

Financial promotions are one area where you need to make sure you’re meeting their requirements. You can find out more about what these requirements by contacting us or visit our Financial Promotion Advice page.

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