FCA plans to tackle investment harm, but more could be done says ME Group boss.

Whether you have lost money in a high-risk investment or you’ve been scammed out of your pension, the Financial Conduct Authority’s (FCA) plan to tackle investment fraud might be a lifeline for many.

The industry watchdog has published a new strategy designed to give consumers more confidence to invest without being caught out.

Rob Cooper, CEO for ME Group, a firm that helps law firms gain redress for victims of mis-selling through its LegalTech and litigation funding services, welcomes the new strategy but feels there is room for further improvement:

He said: ‘The FCA’s strategy to tackle financial harm in the investment sector presents positive initiatives to help protect the financially vulnerable from scams and inappropriate high- risk investments. These cost both consumers and the industry tens of millions per year.

‘The strategy seeks to rectify missed opportunities to protect consumers and that can only be a good thing.

‘However, it’s disappointing that the plan misses key areas to improve outcomes for retail customers.

‘Excessive costs and charges in poorly performing investments, annual advisor fees with no substantial service and opaque charges are just the start of industry practices that are causing substantial losses to retail investors.  The FCA has all the tools at its disposal to deal with such issues, but such problems are still rife.’

By 2025, the FCA aim to reduce by 20% the number of consumers who could benefit from investment earnings but are missing out.

Amongst other objectives, they hope to halve the number of people investing in higher risk products, reduce the amount consumers lose to investment scams and stabilise the £833m compensation bill for the Financial Services Compensation Scheme.

In a statement on the FCA’s website, Sarah Pritchard, Executive Director of Markets at the FCA, said:

‘Investors have never had more freedom – technology has democratised the market, new products have become available, and people have better access to their life savings than before.

‘But that freedom comes with risk. We want to give consumers greater confidence to invest and to help them do so safely, understanding the level of risk.

‘The package of measures we have announced today are intended to support that – we want people to have greater confidence to invest. We also want to be able to adapt more rapidly to the changing market and be assertive where we see poor conduct and consumer harm.’