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Consumer Panel says Sandler proposals put more pressure on consumer


Date: 9 July 2002

Ref: 06/2002

Consumer Panel says Sandler proposals put more pressure on consumer

The Financial Services Consumer Panel warns that Ron Sandler&#39s wish to simplify the sale of savings products, published in his report for the Government today, is in danger of being achieved at the expense of consumer protection.

The report proposes to encourage the sale of “safe” stakeholder products, based on investment in shares, by allowing firms to sell them without regulated advice. The rules insisting that firms give &#39suitable advice&#39 and &#39know their customer&#39 will be abandoned. The Consumer Panel, however, points out that the mis-selling scandals such as personal pensions, mortgage endowments and pension top-ups have all been the result of firms making unsuitable sales.

Colin Brown, Chairman of the Panel, said:

&#39Under the proposed regime, the consumer will need to know more about financial planning than the salesperson. All responsibility for matching a product to a person&#39s needs is being pushed on to the customer. Even if a stockmarket-based product is made better and safer, it can still be wholly unsuitable for a particular individual &#45 and we think it is wrong to encourage that person to buy it. The Sandler plans are to sweep away the suitability rules which protect that customer.&#39

Colin Brown, Chairman of the Panel, continued:

&#39If the Government is expecting consumers to take over responsibility for judging when share-based savings are suitable and unsuitable, then it must offer them some help. It should establish a comprehensive advice service that ordinary people can turn to. Without it, people will be led into serious mistakes.&#39

The Consumer Panel has already put forward proposals in June 2002 for Government and the Financial Services Authority (FSA) to establish a new service to offer financial planning advice to the majority of consumers, including those on middle and lower incomes. This advice service would provide generic advice on how individuals might save and manage their finances, and the types of products which they should then go out to buy. It would be totally separate from the sales process for financial products.

Many of the other aspects of the Sandler Report are welcomed by the Consumer Panel &#45 particularly the recommendations that the FSA should give more emphasis to consumer education. The Panel looks forward to having further dialogue with both HM Treasury and the FSA to ensure a fair deal for consumers as the details of these recommendations are worked out.

– ends –


Media: 020 7676 0902

Publications: 020 7676 3298

A full list of Panel news releases, publications and consultation response papers can viewed at the Financial Services Consumer Panel website at:


1. Ron Sandler was commissioned by The Chancellor, Gordon Brown MP in June 2001, to undertake a review of the medium and long term retail investment market. His report has been published today, 9th July 2002.

2. The Financial Services Consumer Panel has published two responses to the FSA&#39s consultation on polarisation (CP121). Its second response entitled “Chapter 5 &#45 complementary initiatives in the retail marketplace, from &#39CP121: reforming polarisation” was published on 10 June 2002, and sets out the Panel&#39s views on generic advice in more detail.

3. The Financial Services Authority (FSA) established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA&#39s performance in meeting its objectives. Following the commencement (on 18 June 2001) of certain sections of the Financial Services and Markets Act 2000, the Consumer Panel now has statutory status. The FSA must consider its representations and, if it disagrees with a view expressed or proposal made in the representation, it must give the Panel a statement in writing of its reasons for disagreeing.

4. The Financial Services Consumer Panel also has a responsibility to keep under review developments in financial services generally, insofar as they impact on consumers, and so has made representations to Ron Sandler during the course of his review.

5. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.

6. There are currently thirteen members of the Panel as listed below (for further information on individual members, see the Panel&#39s Web site at

Colin Brown (Chairman) Vinod Kumar

Ann Foster (Vice Chairman) Nick Pearson

Jean Gaffin Paul Salvidge

Yvonne Gallacher Richard Smethurst

Harriet Hall Jane Vass

Dianne Hayter Dave Watts

John Howard


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