Application of the Equality Act 2010 in financial services: Government and FCA respond to the Treasury Committee’s recommendations

• United Kingdom

• Financial services disputes and investigations
• Litigation and dispute management

11-07-2019

Summary:

In May 2019, the House of Commons Treasury Committee (‘the Committee’) published its report on Consumers’ access to financial services (‘the Report’).  At the time, we commented on the Committee’s recommendations on the application of the Equality Act 2010 (‘the Act’)  to providers of financial services. In this briefing we highlight the responses to the Report published by the Government and the FCA and comment on next steps.

Responses:

In our May briefing we highlighted:

• The Committee’s recommendations concerning the FCA’s powers to enforce the Act

There appeared to be a lack of clarity around the Committee’s suggestion that the FCA be given powers to enforce the Act, when it was clear that the FCA already considers that it can take action against regulated firms, insofar as any conduct which is contrary to the Act results in a breach of its principles for businesses.  Further, it was recommended that the FCA should have the power to prosecute civil claims for breach of the Act (e.g. for damages or injunctive relief), on behalf of individual customers, which we commented would be an unusual extension of the FCA’s powers.

The FCA’s response:

• reiterates that it has powers to intervene, through supervising firms, conducting market studies and holding consultations to propose evidence-based interventions to address observed harms.

• states that it is keen to work with the Equality and Human Rights Commission (“EHRC”), so that together they can ensure that consumers in financial services are protected. It appears to be mooted that the EHRC and FCA may devise a system for utilising the EHRC’s expertise as the statutory enforcers of the Act and the FCA’s expertise as enforcers in financial services markets, in the interests of all consumers.

• highlights that it does not presently have a statutory gateway to enable it to share confidential information with the EHRC, that this may form the starting point for further collaboration and that this may require Government intervention to amend legislation.

The Government’s response:

• it considers it essential that the compliance of financial services firms with the Equality Act is properly monitored and enforced and is supportive of the FCA working with the EHRC towards a joint solution to ensure consumers’ rights under the Act are properly protected.

• The Committee’s recommendation that firms should be obliged to provide interpretation services for those for whom English is not their first language

We had concerns about this recommendation by the Committee, as having a first language other than English is unlikely to be a physical or mental impairment such that it is a disability for the purposes of sections 6 and 20 of the Act and we commented that there was no clear basis for the Committee to assert that the Act requires financial services firms to provide interpretation services to customers for whom English is not their first language.

Neither the FCA nor the Government directly address our concern in their responses.  However, the FCA and the Government address the Committee’s broader recommendations that the FCA should act to ensure that alternative methods of communication are made available to consumers, with there being legislative intervention to put in place legal obligations on financial services firms to provide alternative methods of communication if the FCA or EHRC feel that they cannot compel firms to act in this manner.

The FCA response:

• indicates that it will be introducing guidance in Summer 2019 on the treatment of vulnerable customers, and that it will make it clear to firms that it expects them to think about its communications with vulnerable customers and the skills and capabilities of its staff in this regard.  However, the FCA states that it is important to get the balance right between providing sufficient clarity, allowing flexibility and being proportionate.  Further it states that setting standards on particular formats or channels of communication to meet obligations under the Act are matters that are generally beyond the FCA’s control and expertise.  The FCA believes that other bodies, such as the EHRC or Equality Advisory and Support Service are better placed to act if there is a need to do so.

The Government’s response:

• it expects the FCA and EHRC to consider how best to ensure financial services providers are aware of their obligations to make their marketing or direct communication materials available in accessible formats, as part of any collaboration between these bodies.

Comment:

Financial services firms will take a keen interest in the increasing cooperation between the FCA and EHRC and what that means for their businesses. If amendments to legislation are required to enable the sharing of confidential information between the FCA and EHRC (in order to progress increased cooperation between the two bodies), there may be cause to question whether increasing cooperation between the FCA and EHCR will be progressed at pace, given the Government’s and Parliament’s present focus on Brexit.

On the issue of the mediums by which financial services firms communicate with customers, it appears that neither the FCA or the Government see a need for legislative amendments at the present time.  Firms will be reassured by the FCA’s comments which appear to reject a prescriptive approach, in favour of allowing firms to take a flexible and proportionate approach to means by which they meet their requirements under the Equality Act, subject to further guidance which is to be issued by the FCA.