The financial services industry needs to tackle its "complexity problem" to make it easier for consumers to understand product choice and protect the most vulnerable, the regulator has said.
Financial Conduct Authority (FCA) director of policy, risk and research Christopher Woolard said at the TISA annual conference that financial services products that are deliberately designed to cover firms' back in the event of consumer gripes were unacceptable.
Products and services need to become more transparent and their clauses, terms, conditions and suitability for clients easier to identify, he said.
Woolard said: "Confidence of all consumers in financial services products that they buy is vital to a proper functioning market. We'd like to see that firms' products, particularly essential ones, are transparent and fully understood by consumers.
"We get consumers caught out by clauses, hidden terms and conditions, or products sold that do not meet their needs. That culture has to change."
"We expect firms to treat customers fairly when they are dealing with difficult problems or circumstances."
The FCA had found a number of cases where firms had been difficult with customers and referred to hidden clauses in their agreements after they were approached following a change in the customers' circumstances.
Woolard warned that the 'vulnerable' were a "much larger group in society than any of us ever thought" and protecting them was "incredibly important to [the FCA]".
People deemed as vulnerable included the unemployed, bereaved, elderly, as well as those who are financially illiterate, he said.
Woolard said the regulator welcomed recent initiatives to financially educate people but education alone was not enough to solve the 'complexity problem'.
While he questioned whether the Sergeant review of simple financial products - commissioned by the Treasury and published in March - would ever be turned into "tangible changes" for consumers, he called for a long-term committment from the industry to help make the market better.
The FCA recently started to analyse its data in segments to get an idea of how they could affect various consumer groups and determine the effectiveness of regulatory intervention.
Woolard said the regulator was prepared to share its findings with the industry some time in the near future.
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