Instead the Panel wants the FSA to focus on getting the industry to deliver products and services that are fit for purpose and genuinely designed to serve consumer needs.
In its response to the FSA's Discussion Paper, the Panel argues strongly against the concept of ‘consumer responsibility'. It believes the retail market is suffering not because of consumers' actions, but because of the behaviour of firms. It also points out that financial products are quite different from other tangible consumer goods.
It is entirely reasonable that the FSA should be promoting sensible actions for consumers to take when seeking advice. However, the complexity of many financial products and the difficulty of finding an acceptable way to describe risk means that most consumers are ill-equipped to judge how a product will perform in future, and whether it meets their needs. By raising the flawed concept of consumer responsibility, and placing unrealistic expectations on consumers, the Panel fears that the FSA risks giving firms an excuse to evade responsibility for serving consumers well.
Adam Phillips, Acting Chairman of the Financial Services Consumer Panel said: "The FSA's concentration on ‘consumer responsibility' is unrealistic and unhelpful in discussions about how to create an effective and efficient retail market that delivers real benefit to the consumer, the industry and to society. The regulator should focus its attention on the firms it authorises, not the consumers it is set up to protect."
