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‘Risk check will not be regulation of products’

The FSA has assured product providers that its new process for assessing the risks posed to consumers by financial products will not stifle innovation.

The product risk framework modelling tool sets out criteria to help the regulator analyse product risk and is used to filter out products that the FSA thinks need to be flagged up as holding potential problems for consumers.

The PRF is a series of tests, including the inherent characteristics of the product, the controls that firms have in place on the marketing of it and the target audience of consumers.

The FSA has tested the process with firms, trade bodies and its consumer and practitioner panels and plans to roll it out in the second half of this year as part of its assessment of emerging risks.

But the regulator says that the PRF is not product regu- lation through the back door and dismisses criticism that the tool may discourage firms from launching innovative new products.

FSA spokesman Robin Gordon-Walker says: “We are not a product regulator. The PRF is not about saying this product is not allowed. It just helps us to analyse the risks rela- ted to products.”

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