Last week, the FSA published a feedback statement, saying the industry failed to reach a consensus on how much consumer responsibility should apply to financial decisions.
As a result, the FSA abandoned plans to shift more responsibility from firms to consumers.
Tenet group distribution and development director Keith Richards says: “Not having consumer responsibility for financial decisions is illogical and leads consumers to feel that at any time in the future they can claim that the advice they received was unsuitable. It leaves IFAs in a very difficult place.
“We need to give consumers more credit for being able to understand the difference between suitable and unsuitable advice. That would drive the behaviour of consumers to ensure they seek information and make informed choices.”
Skandia claims that a lot more work needs to be done on financial education and engagement before consumers can take greater responsibility for financial decisions.
Chief development officer Peter Mann says: “For consumers to make informed choices, they need to be interested and they need to be educated. There is still a lot of work to do to raise consumers to a position where they can take responsibility for their financial decisions.”
Mann says the belief that greater responsibility will drive consumers to actively seek out information and understanding does not work in a practical sense.
He says: “That is the triumph of hope over current experience. It does not accord with the world that exists outside.”
Financial services consumer panel chairman Adam Phillips believes that the FSA has “listened to reason”.
He says: “The FSA’s original idea that consumers should have regulatory responsibilities was at best naive, and at worst irresponsible. The panel has always argued that the concept of consumer responsibility is flawed.”