FSA to start issuing product warnings in hardline approach
Share
The FSA is to start issuing product warnings as part of its hardline approach to product intervention and says it will not wait for Europe to push ahead with tougher product regulation plans.
FSA interim managing director of the conduct business unit Margaret Cole (pictured) has told Reuters she expects the regulator to start issuing warnings soon on products where there is significant risk of consumer detriment.
Cole says: “I expect us to start being more clear, being more direct both to firms planning products and to consumers about the dangers of products, such as structured products we have concerns about.”
She says the regulator has already been toughening up its approach to products.
She says: “We have been asking for minutes of product approval meetings and there are examples where we have told a firm to go back and add features to a product to bring about greater comfort on our part.”
The European Union is set to issue draft laws to bring more products under retail rules, typically tougher than those in place for wholesale markets.
But Cole says: “We do not need to wait for new legislation or regulation to be moving in that direction.”
In January the regulator published its product intervention discussion paper, which floated a range of measures to strengthen the regulation of financial products including product bans, price caps, and limiting sales volumes.
The Treasury also put out a consultation paper in February which set out new powers for the restructured regulator, the Financial Conduct Authority, to ban products for up to one year to prevent consumer detriment.
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
View results 10 per page | 20 per page
Readers' comments (18)
Peter Herd | 31 Aug 2011 10:07 am
ABOUT TIME !!!
Unsuitable or offensive? Report this comment
Harry Moore | 31 Aug 2011 10:29 am
I agree with this, this is good work on the part of the Regulator. Lets hope they follow through and providers clean up their products and marketing brochures.
Unsuitable or offensive? Report this comment
basil | 31 Aug 2011 10:30 am
I can't believe that we've been paying regulatory fees for all these years and the FSA are only NOW starting to do something to earn these fees.
Unsuitable or offensive? Report this comment
Andrew Moore | 31 Aug 2011 10:33 am
Great - that is what the FSA should be doing and should have been doing with the likes of Arch Cru, Keydata etc etc.
Should lead to a lot less IFA detriment as well!!
Unsuitable or offensive? Report this comment
Bob Donaldson | 31 Aug 2011 10:40 am
The only problem with this as I see it is it more literature that is going to be given to the client.
Having just run off a KFD for Fidelity Funds Network running to 53 pages for an ISA and 58 pages for a collective, 187 pages for CI with Term Assurance plus 8 pages for PHI how much more can the client taken.
We are chopping down too many trees and swamping the clients with paper regardless of whether or not we precis it for the client at meetings.
Unsuitable or offensive? Report this comment
Steve Laird | 31 Aug 2011 10:44 am
A good idea in principle. I'm just a lttle concerned about the implementation in practice, given the changes made to some of the risk profile questionnaires following the FSA's review.
Asking virtually the same question several times does nothing to improve outcomes for clients. Any risk profiling needs to take account of the inflation risk of leaving cash on deposit, which is just as important. The (revised) risk profilers I've seen don't cover this at all.
Unsuitable or offensive? Report this comment
Antonio | 31 Aug 2011 10:47 am
After many years of the FSA sitting on their hands and doing nothing to properly REGULATE the Government has decided to re-badge them - (same people - dfierent name !!) .
So all of a sudden the FSA bods are scurrying around with high viz jackets showing everyone how wonderful they are at actually doing the job should have been doing !!
I think most of the financial services industry know they have been a complete and utter failure. Anything they are doing now is just re-arranging the deck chairs on the Titanic and making sure they have their lifeboats to sail off to their next pot of money, while great numbers of good honest people go down !!
Unsuitable or offensive? Report this comment
Anonymous | 31 Aug 2011 11:06 am
Yes, it has taken a long time. FSA first investigated the selling of structured products in 2004 when thousands of ordinary savers lost money in precipice bonds. FSA investigated again in 2008 when thousands more ordinary savers lost money in Lehman-backed products. FSA concluded 'widespread mis-selling' at that time. But why does FSA not take more direct control of FSCS? The compensation body is supposed to follow FSA rules, but seems to be pretty autonomous is its decision making. Despite FSA concluding 'widespread mis-selling', FSCS is still making it difficult for mis-selling victims to get compensation.
Unsuitable or offensive? Report this comment
Ken Durkin | 31 Aug 2011 11:11 am
The difference between depositors in Northern Rock and investors in Keydata? Taxpayers compensated Northern Rock depositors...
Unsuitable or offensive? Report this comment
an old IFA | 31 Aug 2011 11:17 am
can't wait for a product the FSA have approved to end up with the FSCS!
Unsuitable or offensive? Report this comment