Regulator prepared to step in to protect consumers
The Financial Conduct Authority (FCA) has confirmed that it will have the power to temporarily ban products to protect consumers.
The new powers will let the incoming regulator restrict the use of certain parts of products, restrict the type of customer a product can be sold to or ban products outright.
The FCA’s bans will last for one year, during which time the regulator will try to fix the problem.
The FCA said that it might consider using the powers when:
- A product is in serious danger of being sold to the wrong customers, such as when complex products are sold to the mass market
- A non-essential part of a product causes serious problems for consumers
- A product is inherently flawed
FCA chief executive Martin Wheatley said: “The creation of the FCA is our opportunity to reset conduct standards. This power, along with our other new powers, helps define how we will regulate going forward.
“We know that some in the industry are concerned about us using this power too hastily; I want to be clear that we know proportionate judgement is needed, and that is what we will exercise. I do not expect us to use this power frequently, but both industry and consumers need to be clear that we will not hesitate to use these powers where we have serious concerns.”
The FSA consulted on the issue last December, ahead of handing regulation over to the FCA and Prudential Regulation Authority in April. The Financial Services Act 2012 introduced this rule-making power as part of the FCA’s regulatory toolkit.
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