When it comes to financial regulation, consumers should always come first. Protecting them is—or at least should be—the primary objective of any regulatory body. But is that truly what’s happening in the UK today? Increasingly, it feels like the voices of ordinary people are being drowned out by the deafening lobbying power of financial institutions.
A Battle of Unequal Voices
Here’s the stark reality: financial institutions are flush with resources, much of it derived from consumer money, while consumer advocacy organisations are struggling just to keep their doors open. This financial imbalance creates an uneven playing field, especially in the halls of power where policy is made.
When consultations on regulation take place, 99% of the responses come from industry voices. Consumers and their advocates, underfunded and often outmanned, make up a mere 1% of the conversation.
This overwhelming dominance skews decision-making, placing the secondary objective of promoting the City’s international competitiveness ahead of the primary goal of protecting consumers.
The Growing Focus on Investment
Financial institutions are currently eyeing a staggering £430bn sitting in UK savings accounts. They argue that many consumers are ready to invest but are held back by an aversion to risk. A report from the UK Crowdfunding Association claims that millions of Britons with the capacity and appetite for risk aren’t investing, resulting in a potential £53bn–£165bn in “lost” investment for UK businesses.
However, this narrative oversimplifies the issue. It overlooks the diversity of consumer needs and preferences. Investing isn’t just about appetite for risk—it’s about individual circumstances, such as the need for liquidity, long-term security, or simply the comfort of knowing your money is safe. Pressuring consumers to invest without considering these factors does little to serve their best interests.
The Danger of a One-Sided Approach
The imbalance in lobbying power means that industry concerns often dominate regulatory discussions. Recently, the Financial Conduct Authority (FCA) has faced criticism for being too restrictive in areas like crowdfunding and peer-to-peer lending. Some claim this limits investment opportunities and stifles UK economic growth.
But here’s the flip side: these platforms are often too risky for the average retail investor, exposing them to losses they cannot afford. Regulation must strike a balance—encouraging growth while safeguarding consumers. Unfortunately, when one side holds all the cards, that balance is lost.
The Solution: A Fiduciary Duty to Consumers
What we need is a fundamental shift in priorities. Regulators and institutions alike must adopt a fiduciary duty—putting the consumer’s best interests first, above all else. This means considering not just what’s profitable or expedient for the industry but what genuinely benefits individuals and their families.
A fiduciary duty would ensure that regulations are designed to protect people, not just profits. It would amplify the voices of consumer champions and create a fairer, more balanced system where the needs of ordinary people are truly heard.
The Call to Action: Speak Up for Consumers
Now, more than ever, we need to empower consumer voices in financial regulation. If we want a system that works for everyone, not just the wealthy and powerful, we must demand change.
Here are a few ways to take action:
- Support consumer advocacy groups: These organisations need resources to level the playing field.
- Engage with consultations: Share your views on financial policies and regulations.
- Call for greater accountability: Advocate for a fiduciary duty in financial regulation.
Together, we can ensure that consumer protection remains at the heart of financial decision-making, where it belongs. The system exists to serve the people, not the other way around. Let’s make sure it stays that way.
Q&A: Understanding Consumer Voices and Financial Regulation
Why is consumer protection the primary objective of financial regulation?
Consumer protection ensures that individuals are safeguarded from unfair practices, risky financial products, and predatory behaviour by financial institutions. It builds trust in the system, empowers people to make informed decisions, and ensures their financial wellbeing is prioritised over profits. Without strong consumer protection, individuals are left vulnerable to exploitation, which can lead to devastating personal and economic consequences.
What’s wrong with financial institutions lobbying regulators?
Financial institutions have vast resources—often derived from consumer money—to employ lobbyists, fund research, and influence policy decisions. Meanwhile, consumer organisations often lack the financial power to have an equal voice. This imbalance means that the priorities of the industry—such as profits and international competitiveness—tend to dominate, while the needs of consumers are often overlooked or sidelined.
Why is there so much focus on investing savings?
The financial industry sees the £430bn sitting in UK savings accounts as untapped potential for investment. They argue that many consumers are ready to invest but are held back by an aversion to risk. However, this perspective doesn’t consider individual circumstances, such as the need for liquidity, emergency funds, or personal preferences for financial security over growth.
Isn’t investing better than saving for everyone?
Not necessarily. Investing carries risks, and while it may work for some, others may have legitimate reasons to prioritise savings. These could include needing easy access to funds, having sufficient assets without needing to take risks, or simply feeling more comfortable with safer financial options. Financial decisions should always be based on an individual’s specific goals, circumstances, and risk tolerance—not pressure from the industry.
What’s the problem with the FCA’s regulation of crowdfunding and peer-to-peer lending?
Some argue that the FCA’s regulations are too restrictive, making it harder for crowdfunding and peer-to-peer lending platforms to attract investors. While these platforms can play a role in supporting businesses and economic growth, they also carry risks that may not be suitable for most retail investors. Regulation aims to strike a balance between protecting consumers and encouraging innovation, but this balance can be lost when one side’s interests dominate the conversation.
What is a fiduciary duty, and why is it important?
A fiduciary duty means putting the best interests of consumers above all else. It’s a legal and ethical responsibility that ensures financial decisions are made with the consumer’s wellbeing as the top priority. Adopting a fiduciary duty in financial regulation would ensure that consumer protection remains the central focus, preventing profits and industry self-interest from taking precedence.
How can ordinary people amplify their voices in financial regulation?
- Support consumer advocacy groups: These organisations work tirelessly to represent consumers but often lack the resources to compete with industry lobbying.
- Participate in consultations: When the government or regulators seek public input, make your voice heard. Your perspective matters.
- Advocate for change: Call for policies that require a fiduciary duty in financial decision-making, ensuring the system works for everyone.
What can I do right now to make a difference?
Start by staying informed and sharing what you learn with others. Support consumer organisations through donations or by amplifying their messages. If a consultation or public debate arises about financial regulation, take a few moments to contribute your thoughts. Change starts with collective action, and every voice matters. Together, we can push for a system that prioritises fairness, transparency, and consumer wellbeing.
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