The FSA fails to properly "follow up" on enforcement action it takes against firms, leaving consumers potentially under-compensated, the Financial Services Consumer Panel (FSCP) says.
In its response to the Turner Review, the FSCP says while the regulator has recently "upped the anti" in its crackdown on firms' illegal or unfair practices, it fails to ensure its actions filter through to the affected customers.
In particular, it says the FSA must improve its scrutiny of those firms instructed to undertake past business reviews.
Elsewhere in the paper, the FSCP says the regulator must deliver on its promise to increase its supervision of how firms conduct their business, raising again the issue some may be tempted to "go over the boundaries" of good practice to increase revenues in the recession.
The paper is the FSCP's response to The Turner Review, which proposes a regulatory response to the global financial crisis.
It also argues the FSA should regulate all aspects of business of the firms it authorises, including provision of consumer credit which, at present, is overseen by the Office of Fair Trading.
"Some of the most detrimental practices have occurred in the provision of credit," the paper reads. "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."
FSCP acting chairman Adam Phillips says: "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."
HAVE YOUR SAY:
"The FSCP, Parliament, AIFA, APCIMS, the BBA, the press, Uncle Tom Cobbleigh - all are critical of the FSA. Does ANYONE have a good word? If so what is it?" Harry Katz, Norwest ConsultantsIFAonline
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