Speaking at a Treasury select committee meeting last Wednesday, FSA chairman Lord Turner said the idea will be an “open issue” included in its report into banking regulation, due on March 18.
Lord Turner said: “I think regulators so far have been wary of that degree of ability to step in and simply say I am going to product-regulate but I certainly do not exclude it.”
Later in the committee meeting, Turner also signalled that the FSA will look at regulating mortgage products.
He said: “What we will be doing in the review that we produce in three weeks time is signalling not a definitive answer to our proposals on this but signalling that we can certainly see a strong argument for us getting more involved in product regulation than we have in the past.”
Beachcroft Regulatory Consulting managing director Richard Hobbs says: “For the last decade, the UK has lectured the EU that you should regulate process, not products. The FSA has got other member states, Germany. in particular, to sweep away product checks to achieve a single market. For the UK to turn round and say we want something else would be difficult.”
Evolve Financial Planning director Jason Witcombe says the FSA should not be trying to eliminate risky products from the market. He says: “There is a market for risky products so they should not be banned completely but there is a need for much clearer product information to make the level of risk clear in the marketing material.”