Pritchard: Regulatory reform to support mutual growth

FCA Deputy Chief Executive Sarah Pritchard outlined the regulator's approach to reform at the BSA Annual Conference. She emphasized fostering innovation, supporting mutual sector growth, and helping consumers navigate financial decisions.

Rebalancing risk for future growth

The FCA's strategy focuses on supporting growth and innovation, helping consumers, fighting crime, and working more smartly.

This involves a deliberate shift towards a less prescriptive, outcomes-focused regulatory approach, granting firms greater freedom to innovate while delivering better customer outcomes.

The regulator has strengthened its support through good and poor practice guides for the Consumer Duty, tailored information for smaller firms, and a new Mutuals Society Development Unit, launched with the PRA.

Amanda Shepherd, formerly of Newcastle Building Society, will join in May as senior advisor for mutuals to bolster standards and long-term growth.

The FCA also supports modernizing the redress system, with the Financial Ombudsman (FOS) being crucial for system confidence, ensuring clarity for firms and impartial resolution for consumers.

Further proposals aim to improve redress in practice, promoting consistency for firms and faster compensation for consumers, with an emphasis on firms proactively addressing harm.

Navigating consumer vulnerability

As consumers face persistent cost of living pressures, the FCA is closely monitoring data for signs of increased vulnerability.

Firms are already required to act early and proactively for consumers in or at risk of financial difficulty, providing clear communications and support.

Lenders must signpost free, impartial debt advice before pursuing debt collection.

While positive changes are observed since the Consumer Duty, nearly half of adults with problem debt remain silent, highlighting the critical role of banks, building societies, and lenders in encouraging dialogue.

This support is particularly vital as nearly 2 million fixed-rate mortgage deals mature this year.

However, the broader mortgage outlook is more encouraging than headlines suggest, with less dramatic rate rises, borrowers stress-tested at higher rates, and arrears peaking in Q2/Q3 2024 before falling.

The Financial Policy Committee affirms UK households' resilience, but the FCA remains vigilant, continuing to monitor data closely.

Mutuals as catalysts for change

The mutual sector stands uniquely positioned to drive financial innovation and inclusion, leveraging its deep community ties.

However, the FCA's continued emphasis on regulatory engagement suggests a lingering need for firms to actively shape the evolving framework rather than passively adapt.

Ultimately, the success of these reforms hinges on a genuine collaborative spirit, translating policy intent into tangible, member-centric outcomes.