The Financial Conduct Authority has set out how it plans to use its new temporary product intervention powers under which products can be banned before the industry has been consulted.
The FCA will be able to use its powers, such as banning or mandating product features or limiting their sale to certain customers, if consulting on new rules would cause a delay which could harm consumer interests or trigger a significant industry redress bill.
In a consultation paper, published this week, the FCA says the powers may be used where products are being targeted at the wrong customers, where there are problematic features of the product, or where a product is inherently flawed.
The powers will last for up to 12 months and cannot be renewed. During that time the FCA can consult on a permanent solution or resolve the problem in another way.
The FCA says it is unlikely to be able to contact all affected firms when it uses its product intervention powers, but says providers should be aware when the powers are used due to the likely media coverage.
Investment Quorum chief executive Lee Robertson says: “The FCA has been driven to adopt these product intervention powers to try and stop the rot at an earlier stage.”