The FSA's proposed self-help guide - using selected questions to establish a product's suitability -...
The FSA's proposed self-help guide - using selected questions to establish a product's suitability - will give consumers only "second-class" protection, says the Financial Services Consumer Panel.
In a response to the FSA's consultation paper 'Options for Regulating the Sale of Simplified Investment Products' , the Panel urges the City regulator NOT to relax consumer protection rules for selling the government's proposed stakeholder products.
Guided self-help will not be enough to protect consumers, says the Panel, and adds that there might be a potential for mis-selling if the sales and advice regulations are softened.
Chairman of the FSCP Colin Brown advocates the current suitability rules be kept in order to protect customers, as "these investment products will be aimed at customers who are least likely to understand them".
The Consumers' Association (CA) is also concerned about the FSA's approach to regulating the sale of simplified investment products.
In order to promote the 'self-help' guide further, the regulator has decided to conduct further consumer research to see how effective it would be.
But while CA is pleased with this decision, it questions how impartial this process will be in light of the FSA's clear stated preference towards adopting this approach.
A spokesperson for CA says:
"Following the Equitable Life scandal, stockmarket volatility and the endowment and pensions mis-selling scandals, consumer confidence and trust have been hugely damaged."
"[But] despite the concerns of consumer groups, the FSA has publicly nailed its mast to the "self-help option", before it has carried out any research to determine whether this will properly protect consumers."
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