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FSA criticises inadequate product information

The FSA says providers and lenders are not offering enough product information to distributors and are providing inadequately trained service staff to handle adviser queries.

In its Treating Customers Fairly in Product Design paper released this week, the FSA says it has worries over a lack of stress-testing of products.

It says providers are relying on distributors to test products while literature and product design are driven by the competition rather than the needs of the target market.

The FSA says it is seeing a lack of understanding of the criteria used by compliance departments to approve literature and providers not obtaining feedback from distributors about who is buying products.

The FSA sampled 41 financial services firms across the banking, mortgage, insurance, asset management and investment banking sectors.

It has produced a regulatory guide and policy statement to clarify provider/distributor responsibilities and says it removed certain phrases that some in the industry had taken to mean providers would police distribution.

Director responsible for TCF Sarah Wilson says the paper also underlines the work advisers must do to ensure the material they are receiving is appropriateWilson says: “We are saying that distributors must review the material they get from providers and question and challenge them if they are not comfortable with it. This is a two-way street.”

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