Adam Phillips, acting chairman of the Financial Services Consumer Panel said: "This is the time to challenge whether the FSA's overall regulatory approach works for consumers as well as markets. We agree with the Turner Review that regulatory reform is necessary but we also want to see a clear focus on better outcomes for consumers. It's all very well concentrating on prudential reform to improve the stability of the industry, but that must not be at the expense of consumers.
“The Panel has submitted a paper of concrete changes which could help consumers. One radical step would be to give the FSA power to regulate all aspects of business of the firms it already regulates, so consumer credit would move from the OFT to FSA for authorised firms. We believe the FSA is better placed to put an end to firms lending irresponsibly and encouraging excessive debt - it is what most consumers assume happens now and it will stop firms hiding behind any division of regulatory duties between the OFT and FSA."
The Consumer Panel's response to the Turner Report sets out where the FSA could do more for consumers:
1. The FSA must deliver on its promise to increase its supervision of how firms conduct their business - as firms may be tempted go over the boundaries of good practice with the current pressure to increase revenue and margins. We believe consumers need to be safeguarded effectively. It's essential the FSA improves the quality of supervision and takes effective, timely action where necessary.
2. The FSA must increase its scrutiny of firms' business models not only to identify emerging and growing prudential risks, but also risks to the consumer.
3. The FSA should become a more transparent regulator - particularly by giving consumers information on the companies that are performing well as well as those that are performing badly, so they can be aware of shortcomings in firms before the ultimate sanction of enforcement action by the FSA
4. The FSA should regulate all aspects of business of the firms it authorises, including provision of consumer credit at present regulated by the Office of Fair Trading. Some of the most detrimental practices have occurred in the provision of credit.. There must be an end to institutions lending irresponsibly and so encouraging consumers to take on excessive debt. It makes sense to have credit and savings supervised by the same people.
5. The FSA should take a tougher stance on Enforcement - the FSA has "upped the anti" with enforcement action recently, but there is still not enough follow through to ensure that consumers who have been adversely affected by firms' behaviours, gain compensation. The FSA must ensure that when they instruct firms to undertake past business reviews, those who have been affected by the firm's misdemeanour are effectively tracked down and compensated appropriately.
