View more on these topics

FSA: Risk testing should be on par with over-the-counter medicine

FSA Entrance 480

The Financial Conduct Authority will expect providers’ governance of product risk to be of the same standards associated with vehicle safety and over-the-counter medicine, according to the FSA.

In its Journey to the FCA document, published today, the regulator says the FCA will have a greater focus on product governance and says firms should make their own pre-approval processes more transparent to increase consumer trust.

The document says: “Provider firms will be expected to have robust procedures to assess their target market, perform adequate stress testing and manage the product risks for consumers.

“We would expect the sorts of standards that consumers associate with basic vehicle safety or over-the-counter medicines, for example, to be the norm for widely sold financial products.”

The document goes on to add the FCA will go further than the FSA in challenging providers on the value of their products.

It says: “If necessary, we will be ready to intervene directly by making intervention rules to prevent harm to consumers by restricting the use of specified product features or the promotion of particular product types to some or all consumers.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. It’s about time the regulator looked to regulate the products. The majority of misselling has been due to the product being faulty. This will ‘hopefully’ allow the adviser to match the product to the consumer in a more efficient manner with less likelihood of being accused of misselling 10 years later!

    As comparisons are being made with the medical industry will this also mean the FCA will retrospectively compensate advisers who were wrongly accused of misselling when in fact it was the product provider who let down the consumer?

  2. @ Richie
    you state ‘the majority of misselling has been due to the product being faulty ? ‘
    can you give an example, perhaps UCIS as an example, are these faulty products or just poorly clued up distributors who don’t see much past the commission payment?

    I’m sorry but I don’t think your quote is entirely founded, the ‘majority’ of misselling I’m sure can be laid at the blame door of the distibutor, especially when (looking back at FSA findings) the main reason Tends to be a ATR mismatch between investment and client…..that’s not a provider error, that’s just c*ap advice!

Leave a comment