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UK lawmakers recommend steps to improve financial services access for consumers

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UK lawmakers recommend steps to improve financial services access for consumers

The U.K.'s Treasury Committee said May 13 that financial services providers should not compromise on financial inclusion and will back a legal duty of care if the Financial Conduct Authority cannot ensure they always act in the best interests of their customers.

Firms are not legally required to prioritize their customers' best interests right now and legal duty of care would obligate them to amend that or face repercussions.

"A patchwork of improvements and adjustments have been targeted at some groups of consumers, but the basic level of access is still not universal. There are significant areas of concern where vulnerable consumers are effectively excluded from participating with financial services providers," Chair of the Treasury Committee Nicky Morgan said about the report.

The lawmakers said that the Equality and Human Rights Commission, or EHRC, will no longer enforce access to financial services since it is not one of its strategic priorities and thus the enforcement will be moved under the remit of the FCA or the Financial Ombudsman Service.

The committee added that the FCA should mandate firms to be transparent about the size of their "loyalty penalties" since long-standing customers are paying almost £1,000 more than new customers for the same service or product.

The committee warned against bank branch closures, which mainly affect vulnerable people such as the elderly or those with lower incomes. It highlighted that in a cashless society, the most vulnerable would face "stark consequences."

The Treasury Committee said that banks need to ensure consumers have access to free-to-use ATMs and protect their right to pay for goods and services in the manner of their choosing. It also recommended that the FCA lower the restrictions on opening a basic bank account.

Major banks have been using the Post Office to serve their customers in lieu of physical branches. However, the government has been footing the bill for these services. To mitigate this, lawmakers want banks to fund "banking hubs" in post offices and stop using them as pseudo-branches.

"It can no longer be an option for banks to ignore financial inclusion." Morgan said.