Class actions axed from act but FSA gets review powers
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Plans to allow group actions against financial services firms have been dropped from the Financial Services Act but the FSA is to get new powers to launch widespread sales reviews.
Under the Financial Services Bill, which became law on April 8, the Government intended to allow collective court actions to give consumers redress where there has been a mass failure of practice.
Cicero Consulting says collective proceedings did not survive the wash-up period because the Conservatives wanted to ensure that collective proceedings are seen as a last resort for consumers.
Director Iain Anderson says: “Despite the removal of these clauses, it is clear that whatever the result of the election, collective action will be discussed again in more detail.
“The Conservatives have stated they do not regard this as the end of the story on collective proceedings and would like future legislation to consider the whole range of consumer issues and redress.”
The act gives the FSA new powers to conduct industry-wide reviews of past sales, meaning it no longer needs agreement from Parliament and the Treasury.
Firms can appeal to the Financial Services and Markets Tribunal against any review the FSA initiates but Zurich says the process will be onerous.
Last week, plans for compulsory financial education in schools were dropped from the Children, Schools and Families Bill, after cross-party disagreement over the personal social health and economic education component.
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