The Financial Services Consumer Panel is calling for a statutory review of the FSA, claiming that the regulator does not sufficiently exercise its powers to protect consumers from misleading financial advertising.
The panel says that although the Treasury is committed to reviewing the Financial Services and Markets Act 2000, which underpins the FSA, this will not be until December 1 and that action should be taken now to protect consumers.
Its concerns centre around the fact that the FSA cannot tell consumers about investigations it is carrying out following complaints about misleading ads, which often take months or even years.
Even then, according to panel chairman Colin Brown, more often than not, the FSA will simply persuade the offending provider to pull the ad and still not tell consumers, who will never know that they have been potentially misled.
Brown says the FSA has responsibility for policing financial ads and that it should be doing more in this respect.
He says if the regulator feels it cannot go any further under its current responsibilities, it should seek to have those responsibilities extended.
The panel welcomes the recent FSA initiative urging consumers to contact the regulator with any ads that they feel are misleading but it says continuing action needs to be forthcoming.
Brown says: “Consumers should have a better warning system than currently exists for misleading financial promotions. It is exactly the kind of problem that the review of the FSMA will need to tackle after the act has been working for two years.”
FSA spokeswoman Kate Bristowe says: “It is obviously up to the panel to make that kind of call. From our point of view, the act does not prevent us from protecting consumers. We do it quickly and efficiently.”