UKSIF warns product development could be stifled

UK Sustainable Investment and Finance has called for the FSA to develop a greater understanding of modern sustainable and responsible investments if it intervenes in the development of products.

In January, the FSA published a paper on product intervention, setting out proposals that would see the FSA, and later the Financial Conduct Authority, intervene in product development.

Under the proposals, the regulator will look to focus on earlier intervention in the product cycle, including banning specific products being sold to certain customer segments.

It could also have the power to set maximum prices on specific services, ban or necessitate certain elements of complex products or force more products to carry risk warnings. In its response, UKSIF says FSA supervisors risk stifling the market if they do not have a solid understanding of sustainable and responsible investments.

It also wants the FSA to recognise the particular needs of religious investors and others seeking to reflect their values in their investments and other financial products.

UKSIF chief executive Penny Shepherd says: “If the FSA intervenes more strongly in the design of financial products, its supervisors will need a greater understanding of modern sustainable and responsible investment approaches, otherwise there is a risk that more intrusive regulators may stifle products and practices that deliver value for consumers and for society as a whole.”

Evolve director James Norton says: “This sounds sensible but how it would be implemented is hard to envisage without increasing cost and regulation to consumers.”