The Financial Services Authority has a long way to go before it can claim consumers are properly protected, according to a report from Which?
Which? has produced a paper assessing whether the FSA has done enough to protect and inform consumers since it was set up five years ago.
In the area of financial advice, the report says the introduction of depolarisation was to the detriment of consumers because it has created more complexity and confusion.
It states: “The overall outcome has meant a worse deal for consumers and gave the impression that experienced consumer input on the likely consequences of reform was ignored by the FSA who instead chose to put industry interests ahead of consumer protection.”
Which? believes its concerns are justified by the FSA’s announcement it intends to carry out a retail distribution review and by its latest research into financial advice, which found less than a third of financial advisers reached benchmarks for good advice.
Other areas the report criticises include:
- Financial promotions: Which? says the lack of bold action to name and shame limits the effectiveness of a potentially powerful tool to improve industry practices.
- Pensions: the report argues the consultation paper proposing to remove RU64 would raise costs and have the potential to cause mis-selling.
- Mystery shopping: Which? believes the FSA should be bolder about publishing the outcomes of its mystery shopping, particularly given its move towards principles-based regulation.
The report says the FSA should be more customer focused in its decision making, be a more effective enforcer, be more accountable for its actions and be more transparent about its approach and its work.
Louise Hanson, head of campaigns at Which?, says the industry needs better regulation and she urges the FSA to use its existing powers and tools more flexibly and imaginatively to ensure proper enforcement and effective deterrents.
She states: “The FSA has had a busy five years and yet many of their major challenges in the retail financial area have left consumers exposed. We believe they have not been open and transparent enough in tackling detriment or in robustly challenging the industry.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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