Richard Lloyd – APM opening remarks 2022

Good morning everyone and welcome to the Financial Conduct Authority’s Annual Public Meeting.

I’m Richard Lloyd, the interim Chair of the FCA, and I’ll be chairing this year’s event. 

The main point of today of course is for you to be able to ask us your questions and for us to answer them. 

As usual, any questions that we don’t have time to answer in the meeting will be answered in writing after the event. 

Before I explain the format of the meeting and introduce the people who will be answering your questions, I’d like to begin by reassuring you that the Board’s primary focus at this time is ensuring that the FCA does all it can to help people with the cost of living and to maintain market integrity through this economic turbulence. 

We laid solid groundwork for this before the crisis hit. We’ve made sure that loyal insurance customers aren’t routinely charged more than new customers, we’ve curbed the most exploitative practices some firms used when giving people credit and we’ve established a tailored support regime where we expect firms to do all they can to help customers who have difficulty making repayments. 

As more people find it more difficult to pay their bills many more will turn to credit. 

We are doing all we can to make Buy Now Pay Later[1] safer for people to use under the very limited powers that we have: we’ve made firms make their contracts clearer and fairer, and warned firms about their financial promotions. 

But we urgently need Parliament to pass legislation that brings Buy Now Pay Later into regulation. 

And in times like these the risk of scams and financial crime is greater than ever. 

Criminals are trying to exploit people who need credit through loan fee fraud, where people are tricked into paying for a loan that never materialises. We’re warning people that you should never make a payment in order to receive a loan. 

Tackling fraud by regulated firms is a top priority. 

We’ve also stepped up our ScamSmart campaign[2], warning people about the risks of crypto and other high risk investments with promises that are too good to be true. 

But it will continue to be the case that we can’t stop every fraud that gets reported to us. Parliament has set our remit and we have to prioritise the tasks Parliament has given us. So when we get reports of activity that is outside our remit, like unauthorised firms dealing in unregulated products, we have to work closely with our regulatory partners and law enforcement to help them decide what to do.

But it’s a simple fact that the system for tackling fraud is complicated and frankly under-resourced. 

It’s the biggest crime in the country, costs the country over £130bn a year, and yet less than 1% of police officers and staff are devoted to it. 

My appeal to the new Home Secretary is to make fraud prevention and detection a national priority across the police and law enforcement, so that the public can have greater confidence that when they report a fraud the perpetrators will be caught and stopped. 

Alongside that, it is vitally important that the measures to tackle scam adverts and fraud that were included in the Online Safety Bill[3] are enacted as soon as possible. It simply can’t be right for massive global online platforms to have no responsibility in law to stop criminals paying for adverts on their sites to defraud innocent people.

Looking back at last year, our annual report[4] shows the Financial Conduct Authority continues to change. 

We know that in the past we haven’t always done enough, quickly enough, to stop bad actors. We’ve taken the lessons learned from the independent review into London Capital and Finance extremely seriously and made significant changes to the way we operate, to make markets safer. 

We are being very clear to firms that want to operate in the UK that they must meet our standards. Last year one in five applicants didn’t obtain authorisation, up from one in fourteen the previous year.  

We used anti-money laundering criminal prosecution powers for the first time, and are being more proactive in addressing risks to consumers, even beyond our jurisdiction. 

We are now scanning 100,000 websites every day to identify scams, with hundreds of websites taken down as a result.

We’re breaking new ground by introducing a new Consumer Duty[5], which will set higher standards and require firms to focus on meeting their customers’ needs in everything they do.    

We think this will be a real game changer for the level of protection consumers receive in the UK. It should mean people receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it. This is hardly controversial but, too often, still doesn’t happen.  

For firms, greater clarity about our expectations, including for products not yet on the market, will provide more certainty. Fewer detailed rule changes should bring down costs, while we'll be able to act more quickly and assertively where we spot practices that don’t meet our expectations.    

This focus on high standards supports a world leading approach to positive, sustainable innovation. To give just one important example, the UK was the first major economy to mandate climate-related disclosures[6]. We know there is much more to do but we are working hard, with international partners as they develop their policies, to support the global transition to a low carbon economy. 

The Government's financial services bill[7] which is now before parliament is an opportunity to ensure that, as the world around us changes, we maintain a coherent system of regulation that can keep up with emerging risks of harm to consumers and market integrity, with independent regulators acting in the public interest.