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FSA urged to escalate fines

The FSA needs to ramp up fines for companies that treat customers unfairly, says consumer champion Mick McAteer.

Speaking at the Money Marketing round table on vulnerable consumers, McAteer, who is director of the Financial Inclusion Centre, said that FSA fines had to dent firms’ finances in order for the City to put pressure on directors on issues such as treating customers fairly.

McAteer, a former policy advisor for Which?, said: “There have been a whole host of directors who have had to resign as a result of disappointing shareholders but I am not aware of a single director of a major financial services firm that has had to resign as a result of misselling or misleading consumers.

“Analysts in the City will not put pressure on the boards of financial services companies to treat customers fairly unless they realise that the FSA will hit their bottom line.”

McAteer called the level of FSA fines “paltry” compared with those issued by the Competition Commission, which ican charge 30 per cent of a firm’s annual turnover for breaches of competition rules.

Labour MP for Edmonton and Treasury select commit- tee member Andy Love said: “Which? has talked about greater penalties, mystery shopping and other ways of ensuring consumers are protected if you are to lift the regulatory burden and these steps, on the surface, sound quite sensible to me.”

Prudential managing dir- ector of UK life and pensions Gary Shaughnessy said: “I would be positive about taking a stronger position with firms which cross the line but I think the regulator needs to offer more guidance to those who go to it for advice.”

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