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FCA will act early to slap product ban on firms

Firms could be banned from selling widely accepted products if their sales processes are found to be unacceptable by the Financial Conduct Authority.

As part of the transition to the FCA, the FSA has set up a prudential business unit and a conduct business unit. At the FSA conference, interim managing director of the conduct business unit Margaret Cole said the FCA’s powers to intervene earlier will go beyond banning products and limiting product features to banning specific firms from selling products where there is evidence of flawed sales processes.

She said: “The FCA will need to have a lower risk tolerance than the FSA. This is a fundamental point. The FCA will be prepared to step in early to prevent consumer detriment. This might mean using its powers to ban products before they reach the market or it might mean banning a firm from selling a widely accepted product if its sales processes are unacceptable.”

Cole set out how the FCA’s supervisory model is being developed, with the Arrow framework being replaced with a risk assessment process to liaise with firms’ senior executives and boards to “align good business practice with good regulatory practice”.


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