A recent speech on financial inclusion by a FCA executive outlined the myriad of ways in which the regulator is looking at financial inclusion. Yet while broad in scope, it is short in detail, and in particular, the important detail. So what can insurers take from this?


Sheldon Mills is the FCA’s Executive Director for Consumers and Competition and spoke last week at the ‘Financial Inclusion Virtual Summit 2022’. The speech reads like a run through of a very long menu, ticking box after box. And so while the scope is wide, any sense of how it all fits together is lacking.

Some of you may think ‘ well hey, isn’t it good that so much is happening?’ And in one sense, I get that, but in another sense, a lot of activity doesn’t count for much if it is not being organised around a core framework or strategy. That’s what delivers something that is greater than its parts, rather than just a lot of parts.

Gavin Stewart of Grant Thornton made an interesting point in this Linkedin post, that many of the initiatives that Mills references in his speech are seeking to mitigate a problem for which they weren’t originally designed. They’ve been repurposed for this financial inclusion audience.

Mills talks a lot in his speech about the importance of working with others to tackle the various contributing factors to financial inclusion. Yet that only works in the long run if those partners see it being pulled together. I’ve been in a number of meetings in which consumers groups complain about regulators listening a lot, but then failing to provide feedback about what difference has come out of it. Issues like financial inclusion are more than just listening projects. Initiatives like the Financial Lives Survey should be about more than management information.

Not a Strong Hand

What Mills relies upon for his response on bringing this all together are the FCA’s strategy, its new consumer duty and its work on innovation. This is not a strong hand. The FCA’s 2022 to 2025 strategy contains only a single passing reference to financial inclusion. Likewise in relation to the new consumer duty. And while some innovations will help tackle financial inclusion, other innovations will have the opposite effect.

What this adds up to is an uncoordinated and patchy response to the growing calls for the FCA to engage more with financial inclusion. The obvious question this then raises is why this is so.

I believe that the problem lies with the FCA’s mindset on social justice issues like financial inclusion. They just don’t think that it falls within their remit. That depends of course on how that remit is interpreted. It’s easy to hold the telescope the wrong way round and, like Nelson, see little that they can do. Yet the hand holding that telescope is the FCAs.

Pointers for Insurers

So what can insurers take from this? Firstly, I don’t see the FCA putting together a coordinating framework or strategy for financial inclusion any time soon. This means insurers will experience a disorganised and largely reactive regulatory approach to financial inclusion. This is not what they would prefer – certainty in rules and obligations matter.

Secondly, insurers may be tempted to follow the FCA’s lead and let each of their own initiatives relating to financial inclusion evolve in its own way. This I would caution against. Better that they be coordinated into something more meaningful for the time and effort involved.

How might they be coordinated then? The obvious framework for insurers to use is fairness, for that is the ethical issue at the root of financial inclusion. That said, not many insurers have a fully developed framework for fairness. Adding financial inclusion into it will help steer insurers towards the wider scope that is needed.

And thirdly, insurers should keep an eye on the UK Government’s review of financial services regulation. Will a ‘must have regard’ obligation be placed on the FCA in relation to financial inclusion? If that happens, then the FCA may well expect insurers to demonstrate the very coordinated approach to financial inclusion that they themselves  seem to have spent several years avoiding. The sense of irony will not be lost on the market.

Duncan Minty
Duncan Minty
Duncan has been researching and writing about ethics in insurance for over 20 years. As a Chartered Insurance Practitioner, he combines market knowledge with a strong and independent radar on ethics.
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