B3 Consumer protection in relation to personal finance Function, role and responsibilities of:
• Financial Conduct Authority (FCA)
• Financial Ombudsman Service (FOS)
• Financial Services Compensation Scheme (FSCS)
• Legislation – consumer credit.
Class Learning Activity:
What does the word legislation mean?
Why is it important that the government regulates banks and other financial institutions?
What might happen a business which does not follow the law?
There are laws and organisations responsible for protecting the rights of consumers in relation to personal finance. These help to ensure the consumer is not treated unfairly or exploited. The following organisations and laws are concerned with protecting consumer rights.
Financial Conduct Authority(FCA)
The FCA is an independent organisation with a remit to regulate the actions of providers of financial services. It is funded by membership fees charged to finacial service providers. The organisation's work focuses on three key areas:
Authorisation- Permitting financial service to trade
Supervision- Ensuring procedures and practices are in the interest of the consumer
Enforcement- Using powers to ensure standards are maintained
https://www.bbc.co.uk/news/articles/c9dep6v0ee1o
Financial Ombudsmen Service(FOS)
The FOS is an organisation appointed by the governemnt to represent the interests of the consumer in disputes with financial service providers. It is funded by fees charged to all regulated financial institutions plus additional fees when actions are taken against an institutions. The FOS becomes involved in disputes only if they cannot be satisfactorily sorted between the consumer and the financial institution prior to involving the FOS.
Financial Services Compensation Scheme (FSCS)
This is an organisation in the UK that will pay compensation to a consumer of financial services if the service provider is unable to. They protect all savers in banks, building societies and credit unions up to £5,000, meaning if the provider goes bust the individual will get a refund from FSCS.
Office of Fair Trading
The OFT is a government organised that was established to regulate all markets, including financial markets. The OFT's aim was to encourage fair practices and healthy competition between financial institutions. Since 2014 responsibility for financial institutions has been passed to the FCA.
Legislation: Consumer Credit
These are laws passed by the UK government to enfoce the regualtion of any firm offering credit to consumers. Any firm offering credit, for example leasing, hire purchase agreements or credit cards, must be registered with the FCA.
Click here to find out more about the Consumer Credit Act.