Putting Customers First

Retail finance touches most of the UK population, many of whom have daily contact with it through bank transactions, direct debits and investments. Some of these interactions can have life-changing consequences. But for all its importance, retail finance and, crucially, its regulation, are poorly understood. Whether or not we have a regulatory regime that offers consumers an appropriate degree of protection (including from themselves) for an acceptable set of costs and trade-offs is wide open for debate.

Significant legislative and regulatory change is now underway, with several vital agencies, including the Financial Conduct Authority, in the process of finding their feet or simply being established. This report aims to explain their emerging responsibilities and mandates, and explore how to maintain an effective balance between protecting consumers and monitoring and disciplining providers of financial services.

Putting Customers First argues that adherence to a single principle – regulation shaped by consumer outcomes – would go a long way to securing regulation that is fair, efficient and proportionate. If instead regulators continue to focus in minute detail on each process and input, they are likely to impose an unnecessary burden on the industry and thereby actually harm consumers. The report concludes that it is of national importance that the emerging regime pays attention where it is genuinely needed rather than micromanaging every aspect of an industry that plays a key role in the economy.