The new power was part of April’s Financial Services Act 2010, and has been activated today, along with other changes, by a Commencement Order laid in Parliament by HM Treasury.
Sally Dewar, the FSA’s managing director of risk, said: “This is an important new tool for the FSA, which increases our ability to get redress for consumers when firms have not followed our rules.
“The power would obviously be used proportionately. It is not a substitute for working with industry where there is the potential to bring an issue to a fair and speedy conclusion.
“The FSA will, however, seek to use this power where necessary to ensure consumers are fairly treated.”
The new power would be used in instances when there is evidence of widespread or regular failings that have caused consumer detriment. It is a rule making power, so the FSA must undertake cost-benefit analysis and consult each time it wants to establish a redress scheme.
The Commencement Order included a number of other changes:
• Removal of the FSA’s public awareness objective;
• Introduction of a requirement to have regard to the information provided by the Consumer Finance and Education Body in pursuit of its consumer protection objective.
• The power to publish decision notices as well as final notices. This means that the FSA can publicise enforcement actions earlier, rather than only at the stage of a final notice after a long delay where a person has appealed to the Tribunal.
