THE CREATION OF THE FCA
We will look into the issues raised in the super- complaint and publish a response within 90 days, setting out how we have dealt with it and whether we have decided to take any action.
We will make the process straightforward for the organisations that may send in super- complaints and have put draft guidance on the website to show how the process may work.(10) In early 2013 we will publish further details showing how to set out super-complaints and what we will do once we receive them.
Consumer credit
The Government proposes to transfer responsibility for consumer credit regulation from the Office of Fair Trading to the FCA, and will make its final decision in 2013.
As this progresses we will work closely with consumers, the industry and Government to develop proposals for effective regulation that helps the market to work well and seeks to ensure the fair treatment of consumers.
If the transfer goes ahead, we expect the FCA to take responsibility for consumer credit in 2014. This will be a challenging task, as many firms have credit licences, and we estimate more than half are currently not regulated by the FSA.
If the FCA takes on this responsibility, we will initially introduce an interim regime to make sure consumers are protected while we develop our full regime, which will likely be introduced in 2016. We will consult on our high-level proposals for consumer credit regulation in early 2013, and on the details of the regime in autumn 2013.
Competition
Competition on quality and price is vital in financial services. It creates incentives for firms to continually provide better products and services, helping to deliver innovation and choice to consumers. This matters especially in markets where the financial crisis has led to a reduction in competition.
The FCA has a competition objective and competition duty. These require us to identify and address competition problems and adopt a more pro-competition approach to regulation, recognising the potential of competition to advance all of our operational objectives.
We are in the early stages of developing our approach and set out our initial thinking here. If you have an interest in this area, we have set out some specific questions for response in the annex at the back of this document.
Promoting competition
The causes of poor competition are often complex, and in many cases arise from a combination of problems rather than one thing on its own. In retail banking, for example, some markets are highly concentrated. The Office of Fair Trading (OFT) and Independent Commission on Banking (ICB) have previously concluded that competition is ineffective for a variety of reasons, including people’s reluctance to switch accounts, limited branch networks, and weak recognition of entrants’ brands.
Recognising such problems, we will take a range of actions under our competition mandate, where needed, to bring about markets where:
• There are no undue barriers to entry or expansion. Competition in some markets is weak because it is difficult for new firms to enter the market or attract new customers.
• Consumer engagement with products and services drives competition. In some markets, weak competition is related to behaviour – for example, where people rarely switch products because of concerns about costs or hassle, or where some products are sold together so that consumers are less likely to explore potentially better options. We know there is a limit to how interested consumers will be in financial services products, and our approach to disclosure recognises this.
10 We will also receive referrals from bodies such as the Financial Ombudsman
Service.These will not be known as super-complaints but we will have to follow a similar process – see page 49.
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