The FSA is concerned that an European Union draft directive covering unfair commercial practices could severely damage consumer protection in the UK.
The draft Unfair Commercial Practices Directive is intended to prevent unfair commercial business practices against consumers across all business sectors. It is still in embryonic form but the FSA is so concerned about the possible impact that it has sent a 39-page response to the DTI consultation.
The response is strongly worded and says the directive would threaten to “dismember [the FSA's] strategy for empowering consumers remove large areas of consumer protection in the areas [the FSA] regulates reduce [the FSA's] flexibility to develop an effective regime covering fairness after the point of sale [and] create significant legal uncertainty.”
The FSA argues that it already provides better consumer protection than the measures included in the directive but because the directive is aiming for maximum harmonisation, the UK would be prevented from going further than those measures.
FSA spokesman Robin Gordon-Walker says: “Financial services in the UK are already subject to a comprehensive consumer protection regime. We are not convinced that the directive would advance consumer protection across the EU and are concerned that the only protection that consumers would enjoy would be that permitted by the directive.
“This could remove significant levels of consumer protection that already exist. We do not believe that a convincing case for such a move has been made.”