Written by Ray Clancy
Tuesday, 25 January 2011 10:19
The UK’s financial watchdog has today (Tuesday January 25) published a discussion paper to open a public debate over the future of financial products and how they are regulated.
The Financial Services Authority (FSA) is seeking views on how it and the proposed new Consumer Protection and Markets Authority (CPMA) should pursue the objective of consumer protection and specifically the issue of product intervention.
As part of its new consumer protection strategy introduced last year, the FSA has already introduced a more interventionist approach with the aim of anticipating consumer detriment where possible and stopping it before it occurs. The approach aims to reduce consumer detriment by dealing with problems earlier, scrutinising the whole of the product lifecycle from start to finish rather than just focusing on the point-of-sale.
The paper outlines how the FSA has already begun to make a significant shift towards a more interventionist approach with tighter supervision of the governance of product development.
But it also sets out a range of future interventions that could be introduced in areas where the potential for customer harm is greatest. These might include interventions such as banning products or prohibiting the sale of certain products to specific groups of customers.
‘The crucial issue is how far along this spectrum of earlier and more intense interventions we should progress. This debate comes at a critical time as the scope and powers of the CPMA are being discussed by the government, parliament and stakeholders. It is fundamental to shaping the regulatory philosophy of the new organisation,’ said FSA chairman Lord Turner.
‘Our analysis has led us to the conclusion that a significant shift in approach is required but there are important tradeoffs to be struck between consumer protection and consumer choice, between effective regulation to prevent customer detriment and the costs that that will inevitably impose,’ he added.
Consumer champion Which? welcomed the move and said it is long overdue. ‘We're pleased to see Lord Turner recognise that the FSA's hands off approach to product regulation needs a serious overhaul. Which? has been campaigning for years for the FSA to tackle the problems at the heart of the industry, that many are fundamentally useless or, even worse, toxic to consumers,’ said its chief executive Peter Vicary-Smith.
‘If left to its own devices, the industry will spend its energy inventing products and sales practices that fill the balance sheets but don't deliver for their customers. From pension and endowment mis-selling to PPI and most recently the emergence of identity theft insurance, this hall of shame is evidence enough that a new approach is long overdue,’ he added.
Courtesy : investmentinternational
Tuesday, 25 January 2011 10:19
The Financial Services Authority (FSA) is seeking views on how it and the proposed new Consumer Protection and Markets Authority (CPMA) should pursue the objective of consumer protection and specifically the issue of product intervention.
As part of its new consumer protection strategy introduced last year, the FSA has already introduced a more interventionist approach with the aim of anticipating consumer detriment where possible and stopping it before it occurs. The approach aims to reduce consumer detriment by dealing with problems earlier, scrutinising the whole of the product lifecycle from start to finish rather than just focusing on the point-of-sale.
The paper outlines how the FSA has already begun to make a significant shift towards a more interventionist approach with tighter supervision of the governance of product development.
But it also sets out a range of future interventions that could be introduced in areas where the potential for customer harm is greatest. These might include interventions such as banning products or prohibiting the sale of certain products to specific groups of customers.
‘The crucial issue is how far along this spectrum of earlier and more intense interventions we should progress. This debate comes at a critical time as the scope and powers of the CPMA are being discussed by the government, parliament and stakeholders. It is fundamental to shaping the regulatory philosophy of the new organisation,’ said FSA chairman Lord Turner.
‘Our analysis has led us to the conclusion that a significant shift in approach is required but there are important tradeoffs to be struck between consumer protection and consumer choice, between effective regulation to prevent customer detriment and the costs that that will inevitably impose,’ he added.
Consumer champion Which? welcomed the move and said it is long overdue. ‘We're pleased to see Lord Turner recognise that the FSA's hands off approach to product regulation needs a serious overhaul. Which? has been campaigning for years for the FSA to tackle the problems at the heart of the industry, that many are fundamentally useless or, even worse, toxic to consumers,’ said its chief executive Peter Vicary-Smith.
‘If left to its own devices, the industry will spend its energy inventing products and sales practices that fill the balance sheets but don't deliver for their customers. From pension and endowment mis-selling to PPI and most recently the emergence of identity theft insurance, this hall of shame is evidence enough that a new approach is long overdue,’ he added.
Courtesy : investmentinternational
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