The Financial Ombudsman are likely to inspire confidence. It is an independent body that provides l investigation and ruling in complaints against UK financial services providers. It allows consumers to have access to a free service so that their complaints are examined and solved if they haven’t been treated fairly. This is going to invest confidence because customers have a place they can go to and be listened to. They will try their best to resolve any issues and customers are likely to invest knowing they have people to protect them.
The Financial Services Compensation Scheme (FSCS) is the UK's compensation fund “of last resort”, available to consumers who have bought financial services products from companies regulated in the UK. The Financial Services Compensation Scheme offers protection to consumers from, bank account deposits, insurance, investments, and mortgages. This is likely to inspire investor confidence because it protects consumers from any unfair acts in financial services which means they are likely to invest knowing they are backed up and their investment won’t be wasted.
The Competition and Markets Authority (CMA) work to promote competition for the benefit of consumers, both within and outside the UK. Their aim is to make markets work well for consumers, businesses and the economy. They are responsible for investigating mergers which could restrict competition, conducting market studies and investigations in markets where there may be competition and consumer problems, investigating where there may be breaches of UK or EU prohibitions against anti-competitive agreements and abuses of dominant positions, bringing criminal proceedings against individuals who commit the cartel offence, enforcing consumer protection legislation to tackle practices and market conditions that make it difficult for consumers to exercise choice, co-operating with sector regulators and encouraging them to use their competition powers and lastly, considering regulatory references and appeal. Due to the competition, services will provide new products. Customers are likely to invest if there are a range of products to pick from and decide themselves what is the best product for them.
In the UK there is also Consumer Protection acts which contribute to inspire investor confidence. Consumer Credit act will inspire confidence because it gives a consumer a 14 day cooling off period to cancel the agreement if they are unhappy. Or if you have entered the contract at home or place of work, it is seven days. If you buy a product over the phone, online or by mail, Distance selling regulations give you a seven day cooling off period from the day after you receive the goods. This will encourage people to buy products because if they are unhappy, you can then return it. It will encourage them to try the products out before making a big commitment.
Finally, businesses who operating in the UK also have to abide by EU Legislation and Directives to inspire investor confidence. The aims of EU legislation is to increase market freedom by allowing credit institution, insurance companies and investment firms to carry out business within the EU without needing separate authorisation; this is also known as Single Licence Concept. This is achieved using a number directives that needs to be implemented.
The first EU legislation is Second Bank Directive which gives permit to credit institutions to carry out any activities in the directive in the EU if it permitted in their home state. This will inspire investor confidence because it will open a greater amount of products to customers all around the EU. It will mean that it is easy for customers to buy products from the EU without any hassle of credit cards or other payment systems.
Third Life Directive also known as the Life Framework Directive has provisions that were incorporated into the insurance companies act. This directive introduced the concept of a single line licence for insurance companies that provide life assurance to operate the EU while being supervised in their home state. If operating in another state they must gain authorisation. To gain authorisation an insurance company must limit its operations to insurance only, submit a scheme of operations, be run by people of high standing and have a minimum guarantee fund. Investor confidence is likely to increase due to having insurance schemes to protect customers anywhere in the EU, due to this protection, customers are likely to buy the products knowing they are protected if anything goes wrong.
Furthermore, another EU directive is investment services directive aims to enable investment firms to operate in different European states. It aims to provide direct access to well-regulated markets across the EU and established basic requirements including and firms that provide certain specified investment services in the EU must obtain authorisation in their home state, firms authorised in that way can then operate in other EU states. Because they must obtain authorisation, it means every product is safe and customers are likely to invest knowing exact what their investment is going towards.
Additionally, the Capital Adequacy Directive applies to the trading book of credit intuitions and to investment firms that are subject to the provisions. The three main objectives are protect investors, establish a level playing field between credit institutions and non-bank investment organisations and to enhance the standing of the EU as a financial centre. This is likely to inspire investor confidence because the main goal is to protect investors and therefore they will feel safe knowing they are protected from any wrong doings.
Lastly, the New Basel Accord wants to develop more risk-sensitive standardised and internal approaches to capital adequacy, aligning capital adequacy assessment more closely the key elements of banking risk. The proposed new framework mutually reinforced minimum capital requirements, supervisory review process and effective use of market discipline. Investor confidence will increase because it ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses so the investors can be assured the banks and building societies have money for their investments.
In conclusion, there are many legislations and regulatory bodies that will inspire investor confidence. It’s important to have these in place to ensure that investors feel like their investments are secure which will mean they are more likely to invest in a larger range of products.