“I come to the panel with very little experience of the financial sector – and that is deliberate.” These are not the words you expect to hear from the newly appointed chair of the Financial Services Consumer Panel (FSCP), Wanda Goldwag.

The FCA appointed Wanda as chair of the independent FSCP – a statutory body set up to represent consumers that works with the FCA on its policy development – in March 2019 for an initial three-year term. But this is by no means her only job. She is also: chair of the Legal Ombudsman, an independent scheme that investigates complaints about lawyers; non-executive director of the Royal Free London NHS Foundation; one of ten members of the Queen’s Counsel appointments panel, which makes recommendations for lawyers to be appointed by the monarch to be one of Her Majesty’s Counsel; and an adviser to Smedvig Capital.

Freely admitting that financial services isn’t her specialist area, Wanda’s career to date describes many senior positions in consumer-focused companies, where people are at its heart. For example, she ran AIR MILES, now known as Avios, for British Airways, and was chair at You at Work, an employee benefits provider, and a founder of Challenge Consultancy, which provides training services in equality, diversity and inclusion.

Wanda's chameleon-like career began with uncertainty about which direction to go in after graduating from the London School of Economics with a degree in economic history in 1976. For a brief period, she worked as an accountant but quickly realised it wasn’t for her. She spent the next 20 to 25 years of her career in marketing, which she “fell into”, working for global companies such as cosmetics brand Yves Rocher, Thomas Cook, British Airways, and financial services firm Fidelity.

Working with the FSCP

The panel ensures that the consumer perspective is represented when the FCA makes major policy decisions. For example, if the FCA is considering its rules around pension transfers, the FSCP will challenge and advise the FCA around issues of consumer protection in the event of any changes.

The panel’s main priority is to ensure that the financial services sector is upholding a duty of care to its customers. “It’s very easy for financial institutions to look at the rules that the FCA produces and perform a box-ticking exercise, but still do something that is to the detriment of the consumer,” she says. In January 2017, the panel published a position paper on its stance regarding duty of care, which outlines its legislative proposal to amend the Financial Services and Markets Act to include specific rules on what constitutes a reasonable duty of care that financial services practitioners should provide for their customers.

The paper reads: “Duty of care would engender long-term cultural change in financial services providers. It would bring much needed clarity to the rules governing the relationship between firms and their customers. Properly supervised and enforced, an obligation for banks and other financial institutions to act in their customers’ best interest would help prevent misselling and other poor behaviour towards customers from occurring in the first place.”

Tips for young professionals
“Do what you’re passionate about. It’s easy to accept a job because you need the money, you’re a bit bored and it doesn’t really challenge you. You won’t grow in those sort of situations – I think I’ve grown the most when I’ve been a bit scared. You learn quicker and you learn from your mistakes.”

Wanda hopes that duty of care will instil a culture of individual accountability and will be taken more seriously at board levels in companies. Duty of care places more responsibility on senior members of staff, too. “Senior directors, including non-executive directors, should be reviewing the products a firm offers and considering if any harm is being passed on to the consumers. For example, harm could be caused by a consumer not fully understanding a product because it’s too complex,” she explains. Since the panel made its recommendations the FCA has issued a discussion paper on the topic and is currently considering next steps.

In harmony with the FCA

The FCA issues hundreds of consultations each year, and for some of them, according to Wanda, the FSCP is the only consumer body to respond. “It is our job to make sure every time the FCA decides on a regulation or supervision, that they are taking time to consider how that would affect individual consumers.”

She explains that most of the time the panel and the FCA work in harmony. However, occasionally there is friction. “We are the critical friend of the regulator. When the FCA proposes ideas and produces a paper, hopefully we agree with the proposals but there might be cases where feedback is needed. For example, we might ask if it has considered vulnerable customers in its proposal. The FCA is very customer-focused and our job is to make sure this is upheld at all times with every decision it makes.”

The case for automatic upgrades

In June 2019, the FSCP called for the FCA to consider an automatic upgrade rule for the sector. It outlines its case in a position paper, which states that a follow-on from a duty of care is the idea of automatic upgrades for customers who are left in poorly performing products. “A customer could be left with an old product with poor features, or one that’s more expensive, and new customers could be getting a better deal,” says Wanda.

The panel is calling for the FCA to require companies to review their existing customers and examine the products those customers hold with them. The panel wants firms to ask themselves: “If this customer took out this product today, would they have the same benefits and features, and would it cost them the same?” If the product wouldn’t have those attributes, the panel would like the firm to automatically upgrade the customer to the most appropriate product.

This is what is known as the ‘loyalty penalty’. She explains that consumers may think that if they stay loyal to a company that’s offering them a product, such as insurance or a credit card, that they will be well looked after and rewarded for their loyalty. Unfortunately, that is not always the case.

A lack of trust

The 2019 Edelman trust barometer finds that global trust in the sector is at its highest since 2012. However, at 57%, the financial services sector is still at the bottom. “It has had some very bad moments, the payment protection insurance (PPI) scandal being the obvious example,” says Wanda. The panel wants to see consumer confidence restored, which is why it is pushing for duty of care and automatic upgrades. It wants to see better, simpler products; fair and transparent charging; and effective redress when things go wrong.

Wanda thinks that some products are too complex to be sold to retail customers, “certainly not without advice. Non-advised sales on products such as income drawdown often have opaque cost structures and offer greatly reduced consumer protection if things go wrong.”

Informed consent

In March 2018 the panel published research showing that consumers are not giving “informed consent” to share their financial data with a third party. The results show that consumers don’t really understand the value of their data and terms and conditions don’t help with this – this was published before the General Data Protection Regulation was implemented in May 2018 in the UK.

GDPR requires consent for data use to be informed and unambiguous, and it strengthens the legal rights of consumers in terms of data ownership. However, Wanda is not convinced that the regulation has helped with the issue of informed consent. “It has stopped strangers emailing us, and I think that’s helpful, but that’s about it so far.”

She has only been in the position of chair of the FSCP since March 2019, but she is feeling positive that she will improve the customer’s experience in financial services, and looking forward to advising and challenging the FCA to do so. She concludes: “I hope that by the end of the three years people will say, ‘Wanda made a real difference’.”