Rathi felt workplaces were another area to target people with financial education saying there was a “huge potential” for appropriately-backed schemes to help promote a saving culture at scale.
“Even opt-in schemes may bolster engagement, as a major supermarket has reportedly found with its new workplace savings app.
“And as financial education is something that continues throughout life, we know that the advice and guidance market in the UK does not work well. Working with the government, it is our hope to reform the system so consumers get the help they want, when they need it, and at an affordable cost.
“This could improve support for making pension decisions or choices with long-term savings and investments,” he added.
Digitisation
Rathi said improving financial literacy wouldn’t be enough, highlighting digital literacy needed to be improved.
“Could financial services providers be more active in nudging customers towards a social tariff? What about employers? Or public service providers?
“While those who can’t use digital services need to be supported, they need not remain digitally excluded.
“India’s unique biometric ID system ‘Aadhaar’ has enabled over 85 per cent of India's underserved communities to access financial services through Aadhaar-enabled payment systems.
“Including through AI-powered voice access, targeting those with limited literacy and internet access,” he explained.
Rathi felt digital inclusion could foster financial inclusion if the FCA along with industry took “an innovative and proactive approach”.
He said: “Do we accept that the risk of a few experiments failing or some people not benefiting from innovation, is outweighed by the potential benefit to the majority of consumers, and long-term growth and productivity improvements?
“I freely admit that we don’t yet have full estimates of the benefits of inclusion to growth and productivity. But experience elsewhere suggests that resolving foundational issues could have big impacts.”
FCA urged the industry to “experiment and learn” which included the FCA experimenting with its own processes and rules which Rathi asked the industry’s support on.
He said: “Some argue that our affordability rules might discourage lending to groups who can’t otherwise access finance - maybe even inhibiting entrepreneurs’ access to microfinance - while others suggest that more prescriptive rules would improve outcomes for consumers.
“We will engage on these concerns, balancing rules on consumer protection and financial crime with access to basic services.”
alina.khan@ft.com
