FCA invites “creative” solutions to financial inclusion problem
The Financial Conduct Authority (FCA) has issued a call for regulated firms to suggest “creative” ways to improve financial inclusion.
Speaking at the Scottish Financial Enterprise event at PwC’s Glasgow office, Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), highlighted the work that is being done to improve financial inclusion across the UK. However, Rathi admitted that more can be done to improve financial literacy.
“We should be more imaginative when it comes to incentives to provide services to under-served groups,” he said.
“The FCA welcomes genuinely creative and evidence-based solutions that regulated firms put forward to support financial inclusion.
“We will be running one of our tech sprints early next year, dedicated to supporting innovators coming up with solutions to financial inclusion challenges. Please do get involved.”
Rathi called for “a new enlightenment” to support financial inclusion across the UK across four key areas: financial education and numeracy; technology; commercial incentives; and diversity and inclusion. He said that technology will be key to achieving this.
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“Financial inclusion matters to the FCA, deeply,” said Rathi.
“If you are outside the financial system or cannot access credit or insurance, you’ll find it harder to get back on your feet when things go wrong. Those sudden expenses of a car or appliance failing, of a burglary or accident, can blow people off course and even out of work.”
He noted that approximately 1.1 million adults living in the UK are currently unbanked, while the proportion of adults in financial difficulty is rising. Rathi confirmed that the regulator is ready to clamp down on the buy-now, pay later sector to “make sure consumers can continue to benefit from innovation and maintain access to affordable credit, whilst being treated fairly.”
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The FCA’s research noted that women and ethnic minorities are more likely to suffer from financial exclusion.
Myron Jobson, senior personal finance analyst at interactive investor, agreed that “glaringly obvious financial inequalities across racial, ethnic and minority groups have been long ignored.”
“The challenge is to proactively endeavour to understand how the system plays a role in producing unequal economic outcomes across the diversity spectrum, how it directly contributes to wealth inequality and establish what needs to be done for a more inclusive financial system – a key enabler in reducing poverty and boosting prosperity,” Jobson said.
“Better collection of data from minority groups is vital to this end.”
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