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Categories:Regulation

Govt to allow consumer groups to force probes into financial misselling

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Consumer groups will be given the power to force regulators to investigate complaints of widespread misselling of financial products under the Financial Conduct Authority, Treasury financial secretary Mark Hoban will announce today at a Which? conference.

The Financial Times reports the FCA, which will take over consumer protection issues from the FSA in 2013, would be obliged to evaluate such a complaint and respond within a set period.

Hoban says: “We’ve proposed a range of new powers for the regulator so that they can give better protection to consumers, including the power to ban toxic products. But we want to go further by giving front-line consumer groups like Which? the power to hold the regulator to account where there has been widespread mis-selling of financial services products.”

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Readers' comments (3)

  • What about investigations into incompetent and/or biased regulation? The solution to everything seems to be just to give the regulator more power and more money. But it can't go on like this indefinitely. The industry's already being squeezed so hard that the pips are bursting out.

    But never mind, say Hector and Adair ~ another £100m may finally do the trick and, if it doesn't, well, we'll just have to raise another £100m on top and maybe another £100m after that. Plus, of course, yet more powers without accountability.

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  • As far as I am aware the "Which" is a commercial organisation whos aim is to make a profit. Why should they be allowed to have power over a Regulator. There are too may quangos and other organisatins making lots of money by hanging on to the coat tails of the financial services industry. How about some one standing up for it for a change. It generates both funds for the economy a provides funds for it clients in difficult times.

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  • Following the Pension Review, the FSA are unable to order an industry wide review on its own account. Approval must be sought from the Treasury who must receive approval from both Houses of Parliament. Is this changing?

    Extract from speech by John Tiner 17/04/2003;

    It is important, for the future, to recognise the differences between an industry-wide review on a basis similar to the Pensions Review - and a more targeted firm-by-firm review of past sales, such as has been undertaken in the context of mortgage endowments. Since 2001, section 404 of FSMA has reserved to the Treasury the ability to authorise the FSA to establish any industry-wide review of past business. The Act provides that HM Treasury would need to be satisfied that there had been widespread or regular failure and that private persons have suffered (or will suffer) loss. This takes the burden of proof way beyond incidental shortcomings within particular firms. Moreover, the Act requires the Treasury to proceed by way of specific Order, which must be approved by both Houses of Parliament. The FSA is therefore not able, as previous regulators were, to order industry-wide reviews of past business on its own account

    The full article is available at http://www.fsa.gov.uk/Pages/Library/Communication/PR/2003/052.shtml

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