The Consumers' Association is telling the European Commission not to heed Government calls to water down consumer protection in the draft investment services directive to allow Sandler products.
CA senior policy adviser Mick McAteer is writing to the EC, arguing that the FSA's guided self-help solution for Sandler light-touch regulation falls foul of the know your customer requirements and suitability tests contained in the investment services directive.
McAteer says if the directive was rewritten to allow such sales it would threaten consumer protection.
The Treasury accepts that the current light-touch regulation option being looked at by the FSA conflicts with Article 18 of the current directive and says it will push for a rewrite.
The Government will ask for amendments to the directive that would allow execution-only business and would not rule out guided self-help sales of the Sandler suite of products.
McAteer says: “We are concerned that the FSA's guided self-help solution falls foul of the investment services directive. To allow guided self-help would severely dilute consumer protection.”
FSA spokeswoman Louise Buckley says: “The Government is introducing stakeholder products. We are just operating within that framework. This question would be better put to the Government.”
A Treasury spokesman says: “The conduct of business requirements in the current draft would have implications for execution-only business and possibly Sandler products. The Government is opposed to this and is making every effort to ensure the draft directive is amended accordingly.”
Liberal Democrat trade and industry spokesman Vincent Cable says: “The Consumers' Association is highlighting one of the big problems of depolarisation. The FSA's proposals look like an attempt to get independent advice on the cheap but will not work effectively.”