In a speech delivered to the Compliance Institute Summit, David Kenmir, managing director of regulatory services at the FSA indicated that the regulator and the industry needed to devolve some responsibility to consumers. He said: “We are currently undertaking some work to determine what we can reasonably expect the consumer to be responsible for. This should lead to an elaboration of what ‘caveat emptor’ means in the financial services markets.”
With the FSA currently undertaking its move to principles-based regulation, James Cotton, mortgage specialist at London & Country, suggested that consumers needed to take some responsibility for their financial decisions. He said: “There does need to be greater responsibility for consumers, but it will be very difficult to write rules on what responsibility consumer have. It will have to be judged on a case by case basis.”
Cotton added that the regulator would need to allow consumers greater responsibility, stating that taking responsibility away from them would lead to a slack marker. He said:
“Education is central and borrowers need to be able to assess the risks of what they are undertaking and if it is viable. If consumers were given even less responsibility if they had a problem they could just claim that they were mis-sold.”
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