Looking ahead to 2023
Rainbird said she is hopeful that “2023 will be a year of greater stability”.
“Although financial challenges will continue for many individuals and businesses in the short term, there are numerous things on the horizon which should improve outcomes in the long term – including landmark legislation for the industry in the form of the Financial Services and Markets Bill and the implementation of new rules under the FCA’s consumer duty.”
While it will be important to ensure that the bill delivers for consumers, it should also help create an environment that enables growth for the industry and helps drive the economy forward, according to Rainbird.
“This time last year, I mentioned the financial harm that all too often happens online, and that FSCS was calling for this harm to come within the scope of new legislation,” she said.
“Back in March, fraudulent financial adverts were included in the scope of the online safety bill, which we hope will become law next year.”
One area Rainbird said she has been struck by is the issues facing young adults in these challenging times.
She described them as a group who often have low financial resilience, coupled with a lack of access to financial advice and support.
“The result sadly means that they are particularly vulnerable to scams and spending a lot of time on social media leaves them exposed to tempting offers for high-risk investments that are rarely, if ever, suitable.” she said.
“The recent collapse of cryptocurrency exchange FTX has provided a stark example of the potential consequences – with estimates showing that more than 60 per cent of its users were under the age of 35.
“I hope that 2023 sees more progress in areas that impact young adults most, so that they are able to build solid foundations for their futures.”
Meanwhile, the FSCS also recently shared its initial forecasts for the next financial year, outlining that it expects to pay just under £600mn to customers.
“This figure has stayed broadly flat over the past few years and remains unacceptably high, putting a burden on many of our levy payers,” she said.
“What compensation will look like in the longer term is an interesting question for us all to consider, but next year we expect more of the same – with claims for general insurance, poor pensions advice and failed self-invested personal pension operators making up the majority of our costs.”
These pension claims will remain in focus in 2023, with the FCA’s redress scheme for former members of the British Steel Pension Scheme beginning at the end of February.
Rainbird explained that both this scheme and the redress FSCS pays to customers each day for negligent advice seek to rectify the problems of the past and put them back on track – with most of the harm occurring five years or more ago.
