In its annual report for 2008-09, published today, the FSCP says expecting consumers to understand the risks institutions are taking, when many in the financial community have not understood them, is unreasonable.
The FSCP says: “We have also pointed out that, although the new £50,000 compensation limit means that 98 per cent of depositors are protected, this still means that only around two-thirds of the total amount deposited is safeguarded. This situation could result in further runs.
“We believe it would make more sense to consumers for all to reap the benefits of a straightforward 100 per cent compensation scheme.”
The FSCP is also arguing that under the retail distribution review, advisers should have to achieve level five qualifications.
It states: “Any increase in minimum professional standards should be welcomed, but we have said there should be a clear timeframe commitment to the aspiration to raise the standards further to level five: in future, entry should be at graduate or equivalent level and the industry should accept that there is no professional group currently which requires less.”
The Consumer Panel says it remains unconvinced that money guidance will give the level of detail and insight required for retirement planning, particularly for decisions on personal accounts.
It says: “Our suggestions to the FSA have been that there should be more coordination with organisations such as PensionsForce and The Pensions Advisory Service, and that focused advice is an option within regulated advice, to cover some of the areas in which money guidance could not meet consumer needs.”
Chairman Adam Phillips says: “The financial crisis has created great challenges for the industry, the FSA and consumers. But in the end, it is consumers, both as paying customers and taxpayers, who are bearing the cost. It is essential to maintain the stability of the financial system, but the FSA also has a statutory objective of consumer protection.
“It must rise to the challenge of ensuring that the financial services industry really does treat its customers fairly.”