The FSA is calling on product providers and distributors to work together to treat customers fairly.

The regulator said providers and distributors of financial products had “differing but interlocking responsibilities” for treating customers fairly (TCF) and needed to work together” to help avoid potential future detriment for consumers”.

In a discussion paper released this week, the FSA encouraged providers to design their products with greater care, to provide higher quality information, to monitor distribution channels more effectively at a high level, and to undertake better post-sale analysis of the performance of products.

It also encouraged distributors to scrutinise more closely information they received from product providers “to ensure specific products are suitable for specific consumers”.

“This should result in fewer cases of unfair outcomes for consumers for example where a distributor believes on the basis of information from a provider that a product is suitable for a customer,” said the FSA.

The paper is designed to help providers and distributors understand their respective responsibilities to consumers and help improve cohesion, confidence and efficiency in the combined distribution effort. “It provides the FSA's view of what the existing Principles for Business mean in a practical sense and does not include new rules,” said the regulator.”

FSA chief executive John Tiner said: "Today's paper is an important element of the Treating Customers Fairly initiative. It is designed to help ensure outcomes for consumers are fair regardless of the route by which they have received a financial product or whether it was provided and distributed by a single institution or by two or more.

“I should emphasise that we are not placing new regulatory responsibilities on either providers or distributors. Nor are we looking for providers to 'police' their distribution channels or for distributors to transfer current responsibilities to providers.”

Tiner added: “We know some firms are doing this already but we do expect providers and distributors to work together to ensure that consumers are dealt with in an effective and fair way. Providers should give more support and information to distributors of their products with a corresponding expectation that distributors should use product information effectively with consumers."

The deadline for feedback from industry is 29 December.

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