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MPs say CPMA should not be a consumer champion

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MPs have called on the Government to scrap plans to promote the new Consumer Protection and Markets Authority as a consumer champion.

The Treasury’s consultation paper on the changes to regulatory architecture, published last summer, stated the CPMA will be a “strong consumer champion”.

But in a report released this morning, the Treasury select committee says using the phrase “consumer champion” is inappropriate, confusing and potentially dangerous.

The report, focused on the Government’s financial regulation proposals, says: “We strongly urge the Government to drop the title of ‘consumer champion’ from the CPMA.

“If a regulator is promoted as a consumer champion, consumers may falsely believe all financial products are risk free, creating moral hazard. It is simply not possible to protect every interest at all times.”

Speaking to the committee yesterday, Treasury financial secretary Mark Hoban said: “People should not see the CPMA as a consumer advocate. What we are looking for is good outcomes for consumers.”

The TSC report says effective regulation should be in the best interests of consumers but that regulators should ensure their regulation is effective and proportionate.

The committee says the CPMA should have competition as a primary objective as it is a highly effective way of protecting consumers.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Since the FSA took over the running of our industry, the number of insurers has plummeted, all direct sales forces have gone, the number of ifa’s has reduced dramatically, bancassurers are now saying they will leave the advice process.

    Less customers/clients are being looked after than ever before.

    A whole load of advisors are going to leave next year and the FSA opinion is that no change is necessary. As their fees and the FSCS fees are increasing and a smaller population of fee payers will exist it does not make for a sustainable business model.

    The MP’s made lots of useful comments in their debate, i have yet to see any action.

    Perhaps we should move to Belgium and passport back.

  2. Call it what they like, it will all be changed again in five years when it has been found to be another waste of time as have each of the different bodies over the last 22 years. The difference this time is that in 5 years time there won’t be much left to regulate as the majority of products sold will be “none advised” as advice based firms pack up and do something else for a living.

  3. ‘Consumer Champion’ implies that there is a battle to be won against all the rogues intent on ripping off the general public.

    The truth is that the regulator, in all its guises, is now costing the public (through advisory fees and commissions which could otherwise be discounted) at least half-a-billion pounds a year (and climbing) and I suspect that any serious cost-benefit analysis would conclude that the public would be better off without the FSA and all the other quangos.

    I am all for treating clients fairly, giving my clients value for money etc but let’s be honest, half-a-billion pounds is actually the tip of the iceberg – every compliance officer in the land, and there must be tens-of-thousands, is employed so that unsuspecting (but honest and capable) advisers don’t make some minor slip. Slip ups that wouldn’t necessarily disadvantage a client but would infringe some FSA ruling.

    Then there is the cost of actually complying – writing 10-page reports to sell some term assurance when half-a-page would be sufficient. Indeed, half-a-page would be read by the client, 10 pages will not – so the consumer champion is also responsible for much of the de-forestation taking place.

    Add the cost of compliance and everything else and it’s no wonder that IFAs need to look closely at whether it’s all worth it – many will conclude in the next 2 years that it isn’t.

    Only then will the FSA (or whatever they’re going to call themselves next week) be seen for what it is. Not a consumer champion but a destroyer of public confidence, a destroyer of people’s willingness to save, a destroyer of people’s willingness to buy protection for their family, a destroyer of people’s willingness to take responsibility for their own actions,

  4. What the CPMA most definitely should be is open, transparent and accountable ~ three things that the FSA claims to be but which it manifestly is not. For those reasons alone, it is unlikely to take any notice of anything Parliament may have to say.

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