At the FSA financial capability conference in Cambridge last week, Turner said that too much investment choice can lead to consumer confusion and prevent people from acting.
He said the FSA needs to ask “radical questions”, including whether there can be too much innovation in some markets, whether some products are too complex to be sold to consumers and if the FSA should intervene on pricing.
Beachcroft Regulatory Consulting managing director Richard Hobbs says the speech indicates a new era in regu- lation, which will include an element of product regulation.
He says the change of direction challenges the focus of the advice sector on “independence” and indicates that the FSA believes independent advice is not as useful to consumers as previously believed.
Baronworth Investment Services director Colin Jackson says if the FSA restricts the range of investment products available to consumers, it could put providers and IFA firms out of business.
He says: “If there is only a limited choice, then you do away with competition, companies go to the wall and IFAs will go out of business. The trouble with this country is that no one is allowed to make their own decisions and stand on their own two feet.”
But Yellowtail Financial Planning managing director Dennis Hall agrees with the regulator that there is too much choice for consumers and advisers.
He says: “Wading through all the different products takes up so much of our time when we need to be spending time with clients and talking to them about their financial behaviour.
“You cannot stop providers coming to the market but there should be very simple kitemarked products that people can buy to go along-side money guidance for people who are not currently engaging with financial services at all.”