The FSA has only an ‘acceptable' score in the areas of mortgage regulation and regulation of small firms for the last financial year, according to the Financial Services Consumer Panel (FSCP) Annual Report .
Judging the regulator on outcomes for consumers, the Panel says in the area of mortgage regulation it was right the FSA conducted a review since taking over in 2004.
However, it says this review revealed problems that need to be followed up for example consumers are not using the mortgage IDD to distinguish between advice and sales, and the industry is yet to fully incorporate TCF.
Its priorities for the FSA for next year are: “Strong action taken against firms who do not apply the principles and rules correctly.”
Mortgage arrears and mortgage affordability were considered ‘weak’ points for the regulator although its work on mortgages exit fees was ‘strong’.
“This is an area where the FSA took strong and clear action last year and has followed up to promote compliance. However, there are now concerns that exit fees have been replaced with a different means of charging consumers extra through fees at the beginning of the mortgage, ” the report says.
On regulation of small firms, the FSCP says it is pleased there has been some recognition, albeit late, that more attention must be given to this area. The FSA must now implement the three year plan for more effective supervision, it says.
When it came to protecting consumers, the FSCP says the FSA was ‘very weak’ in retail banking particularly its handling of the Northern Rock crisis. It was also ‘weak’ in the areas of with-profits.
“We believe the FSA could do more to improve the governance and help consumers get access to helpful advice,” the report says.
FSA transparency was also ‘weak’ particularly highlighting which firms are not coming up to standard.
However, the FSCP says the FSA had been ‘strong’ on TCF, PPI, the RDR and ‘very strong’ on financial capability.
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