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Regulators and ombudsman propose new protection committee

The Financial Services Authority, the Office of Fair Trading and the Financial Ombudsman Service have proposed the creation of a new consumer protection committee.

The committee would be tasked with identifying any risks which could become widespread as well as ways of dealing with them, whether it be through regulatory action or consumer complaints.

Specialists from the three bodies would come together to spot emerging risks in the hope of dealing with the threats quickly. The FSA says the focus on emerging risk would complement its existing supervision regime.

FSA director of conduct policy Sheila Nicoll says: “Complaints handling is a priority area within the FSA’s intensive supervision agenda. The co-ordination committee is a clear indication of the intention, and will, of the authorities to work even more closely together to improve the experience of consumers, and to avoid problems happening in the first place.”

Interim chief ombudsman David Thomas says: “The ombudsman service is committed to preventing complaints, as well as resolving them. It’s key for regulators and the ombudsman service to continue working closely together to identify potential problems as soon as they emerge, to ensure that consumers are treated fairly and can have confidence in financial services.”

OFT director of consumer credit Ray Watson says: “”Identifying and dealing with problems at an early stage is important for ensuring consumers do not suffer unnecessary harm from financial products.  We believe that the proposals for a new co-ordination committee and the focus on risk will improve our ability to deal with problems before they become widespread.”

“It presumably is no co-incidence that FSA’s proposed new consumer protection committee has such strong echoes of the Tories’ plans under its own Consumer Protection Agency”, says Ash Saluja of law firm CMS Cameron McKenna.

“Financial product design is now clearly fair game for the regulator. Although it is still unclear how intrusive the regulator will really be, we are still a long way from product pre-authorisation. But can we be sure that the judgement of the regulator is better than that of product providers”?

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. “The ombudsman service is committed to preventing complaints”. Is it?

    Walter Merricks tried to generate complaints many times, the most blatant was with regard to CIC.

    Anyway, do any of you have any confidence in this virtuous triangle’s ability to catch a pig in a poke? No, far easier for them to make it all up.

  2. Their still breeding!

  3. I think it is a brilliant scheme. As it is going to be so stressfull for them dreaming up more ways to punish our industry, I think they should hold their first meeting on a cruise liner in the Carribean.

  4. It will be interesting to see who selects this ‘committee’ and where will they be selected from? I do wonder if it will be jobs for the boys once again!

  5. Changing the title for what they do will do no good,the things that need changing are:
    1.The personnel
    2.The attitudes of the personnel

  6. More jobs for more boys and quess who will be paying for it all.It looks like just another job creation scheme paid for by small IFA firms

  7. I had to check that it wasn’t April 1st – “FOS committed to preventing complaints”!

    My experience, which I am certain mirrors that of other advisers, is that the FOS actually seeks to generate complaints and by the very nature of its inquisitorial focus it finds fault in areas where that has not even ben a complaint.

    Merricks invited me to South Quay to see how wonderful the operation worked. Revealingly, he kept me well away from the adjudicators.

  8. Quango Quango quango,quango….another useless organisation full of people who have never advised a client in their lives and have no idea what the job of Joe IFA Ltd involves.Consumers are now the most overprotected species in this country and seem to have absolutely no responsibility whatsoever for their own financial well being.I am not an IFA and will never be one because of this type of thing,its not worth it.This is all leading to European style “advice”, a few IFA’s to deal with very high end clients and the banks selling products for inflated commission and charges to as many people as they can.Farcica!!!

  9. Send in the clowns.

  10. I thought they already had…

  11. Until such time as we organise ourselves into a unified group that speaks with one voice and can withold fees, unfairly assessed compensation and taxes we are p…ing in the wind.

    The small IFA needs to collectively act and pressure their respective networks to act on their behalf.

  12. You have to give them top marks for creating new jobs for themselves when their gilded tower comes crashing down

  13. Agree with Michael.
    Join adviser alliance & speak with one voice.

  14. There are valid reasons to express concern over this announcement.

    Its genesis may relate to the Conservative Party’s proposals for a Consumer Protection Agency, however, I suspect, the recent Supreme Court decision over unfair bank charges has at least as much relevance.

    Reasons for concern? Long list, but for starters:

    The Supreme Court decision over unfair bank charges, taken in context, relates to the responsibilities on the part of both the OFT and the FSA for consumer protection.

    It has to be seen as either a success or failure for such protection. I leave you to decide which it was.

    The recent report over Lehmans, records its ability to divert debts off balance sheet.

    Lehmans, was subject to both audit and regulatory scrutiny, as was Enron or closer to home, Equitable Life, or more recently as was Keydata.

    Such external scrutiny has proven to be a success or a failure – which do you think it was?

    One of the safeguards for those requiring authorisation by the FSA, is that the OFT is required to act as an external auditor to the FSA rules and practices, and to ascertain whether any rules or practices can be deemed anti-competitive.

    I leave you to judge whether clear conflicts of interest may arise, or can be dismissed as alarmist, from the suggested joint committee.

    You might wish to bear in mind whether the past record of the OFT stands close scrutiny when it comes to its judgements on competition issues in the regulatory arena.

    Those with a memory may recall that the OFT adjudged the proposals to establish a General Insurance Standards Council as being bereft of any anti-competitive practices.

    However when the Institute of Insurance Brokers took the matter to the Competition Commission, the IIB won and the OFT lost – comprehensively. .

    Can I today offer similar examples of where the OFT has similarly failed to exercise adequate scrutiny of the FSA’s rules and practices?

    Simple answer – yes, and they include some which have a direct bearing on the FSA proposals arising from the RDR.

    In a recent appearance before the Treasury Select Committee, Adair Turner suggested there was a need for “mavericks” – individuals who would challenge conventional thinking.

    The formation of this committee is, for me, a clear example of the need for such individuals.

    When the FSA, and its external auditor, the OFT enter into joint collaboration – for me, it deserves the very challenge Adair Turner insists is necessary.

    Any other “mavericks” out there?

  15. My goodness has someone woken up to the fact that prevention is better than the cure and that trying to cure an illness by treating its symptoms is both costly and time consuming. Shame so many people have already suffered as a result of this attitude and let us not forget the cost.

  16. ‘Poot it too theh cohmittee’. (sorry cannot spell in colloquial English!)

    Just another talking shop, another set of meetings to be paid to attend with the possibility of making things more obscure and devolving responsibility away from the FSA with another layer of bureaucracy.

    The regulator should have been doing this already. This is just another smoke screen to hide the fact that it hasn’t been doing its job properly.

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