Speaking at a Treasury select committee hearing this week, Sants was asked whether he thought the regulator had done enough to warn consumers of offshore risks.
He said it was not within the FSA’s remit to supervise companies outside the UK’s borders but only to regulate advice given by UK IFAs and product literature circulated in the UK.
Sants said: “We certainly have an obligation to make sure that where those firms are marketing into the UK and fall within our remit in that respect, that the information is clear as to their regulatory status and the status of their consumer protection offering. I do believe that that was clear to consumers.”
When asked whether UK IFAs warned of the risks on the investments, he added: “Clearly, if consumers feel they have been missold to by a UK-regulated entity, then they have a case that they should pursue and that would be right for them to do. We are always interested in hearing from consumers who feel they have been missold to and we would take action in those cases.”
Money Marketing research of offshore bond marketing material in November revealed widespread variations in the warnings on lack of consumer protection for cash deposits held via offshore bonds if the underlying bank goes bust.
Scottish Life International, Aegon Scottish Equitable International, Axa Isle of Man, Friends Provident, Legal & General International, Canada Life, Skandia and Clerical Medical all did not make it clear that there may be no depositor protection in the event that the underlying bank used to deposit cash within an offshore bond went bust.
Aifa director general Chris Cummings says: “It is disappointing that the FSA should make a statement like this. Some of the offshore structures were really quite opaque and consumers were left vulnerable. A question needs to be asked about the role the FSA plays in the governance of the organisations that were putting out these products.”
What they said at the select committee hearing