Britain’s financial regulator is growing concerned about the possible effects of a downturn in the economy in 2020.
Until the economy grew by 0.3% in the third quarter of the year, Britain was on the brink of a new recession with negative growth in the two previous quarters.
Areas of concern
The board of the Financial Conduct Authority (FCA) highlighted a number of areas of concern if the economy was to suffer after the general election and Brexit wranglings.
One of the greatest concerns was that consumers could be ‘increasingly exposed to inappropriate investment risk’ as they looked for what would appear to give the best return on their savings.
Fears
Associated pension losses came high on the list with fears being expressed that pensioners would crystallize their holdings, cashing them in to provide funds in the short term, but leaving themselves open to lower lifetime income and even losing their money if they resorted to high risk investments.
For some months the FCA has been expressing concern about firms’ resilience in the financial services market and discussed what they should do if ‘a significant number’ of firms went under in any potential recession.
Plan of action
Their plan of action included proactive communications with the market, laying down its expectations of customers being treated fairly linked to a campaign of ‘assertive supervision’.
It also detailed the establishment of an oversight group to allow for ongoing monitoring and a rapid response should there be any downturn.
