The Consumer Panel Chairman Ann Foster, has highlighted the fact that consumers are being expected to take on the responsibility for making more and more financial decisions, in the way that they save, invest and borrow money for the future. And yet the industry still does not provide enough simple information to allow consumers to compare products and services, demand quality, and resist pressurised selling and misleading advertising.
The Panel has been disappointed that the FSA has delayed certain initiatives which could have improved information for consumers — such as "Key Facts" as standardised information for all consumers in the process of buying an investment product. They have also not taken full advantage of being a single regulator, by allowing the term "independent" to mean different things in investment and insurance selling.
However, the FSA has improved its systems to monitor and identify the up and coming consumer risks in the way products are being devised, promoted and sold, and to draw firms' attention to their responsibility to treat customers fairly.
The Consumer Panel has also been pleased to see the FSA devote more resources to monitoring financial advertising for the coming year, and make progress on the development of a financial capability strategy. However, the Panel warns that financial education will not be a quick fix, and should not be used as a substitute for continuing robust regulation of financial services.
The Panel sets out a list of key areas for FSA action for consumers over the next year. This includes:
* Firms’ culture from top to bottom — We will be pressing the FSA to look further at ways of changing the industry’s culture including the role of commission, penalties for mis-selling, fining individual staff or consultants who misbehave, and ways of increasing publicity about poorly behaving firms.
* Generic advice — Making help on financial planning available to all consumers is essential to enable them to get the most from their money. We will be pressing the FSA to make this happen.
* The information consumers receive from firms — We will seek to influence FSA work on the disclosure regime and ‘Key facts’; projection regulations; the menu of financial advice and its associated costs; and financial promotions.
* The information consumers need from the FSA — We will be looking for improvements in the FSA’s key services for consumers including its website, consumer alerts and the Consumer Contact Centre.
Ann Foster, Chairman of the Panel said:
"It has got to be in the interests of the financial services industry to improve the current level of consumer confidence, so that more people are able to consider their needs and buy the right products for them. But the industry must play its part in helping consumers. At the moment the industry is too product driven, rather than consumer led. The FSA must come down hard on the industry when it tries to pull the wool over the eyes of consumers."
