The Consumer Protection and Markets Authority (CPMA) will follow the same strategy as the Labour-built FSA it is set to replace, the Treasury says today.
David Cameron's cabinet has also confirmed previous announcements the new body will continue with FSA initiatives including the RDR and Mortgage Market Review.
In a consultation paper published today, the Treasury says the new regulator will "adopt" the FSA's Retail Conduct of Business Strategy of consumer protection "involving early detection and intervention through intensive supervision".
It is the same approach announced in March by then-CEO of the FSA, Hector Sants.
Today's consultation proposes the CPMA "will build on the progress recently made by the FSA towards a more interventionist and pre-emptive approach to retail conduct regulation".
"As a starting point, it will adopt the Retail Conduct of Business Strategy."
The Government says it is likely to cost around £50m to create the new regulatory structure in which the CPMA and Prudential Regulation Authority replace the FSA and are brought under the oversight of the Bank of England.
In June, Prime Minister Cameron described Labour's regulatory process as "a system in which no one was looking at the big picture, no one had responsibility and authority to act and no one was effectively in charge".
But justifying its use of policies created under that system, the Treasury paper says these initiatives "recognise and respond to some of the distinctive characteristics of retail financial services that call for a more intrusive approach".
It highlights commission ("long-term product payoffs"), product complexity and "asymmetry of information" between consumers and product providers as areas where a more aggressive strategy is needed.
The approach will be backed by a strong approach to enforcement to ensure "credible" deterrence, it says.
It continues: "The Government will take the creation of the CPMA as an opportunity to examine how consumer protection is enshrined in FSMA and what changes may be needed to update or strengthen the regime.
Combined with a more proactive, interventionist approach to retail conduct regulation by the new regulator, the Government's new framework will ensure consumers are able to operate with greater certainty and confidence in financial services."
Today's paper echoes a speech by Sants in March, when he said: "A regulator must be willing to place themselves between consumers and harm. We will only achieve this by taking a proactive stance."
Described then, Sants "new" strategy involved an integrated model of risk analysis and research, and had the FSA making judgements on firms' decisions and actively intervening in product design.
It also included a greater willingness to test outcomes through mystery shopping and on-site visits, and improvements to the delivery of consumer redress, starting with a review of the complaint-handling standards of all the major banking groups.
‘Most significant’ upgrade since launch
Changes happening over coming months
Had accepted British Steel business
Aimed at HNW clients and family groups
Set for 1 April 2019