The Financial Services Authority has been accused of operating under a “culture of secrecy” and failing customers by not being “bold enough” in tackling misleading advertising and poor customer service.
The criticism follows the publication of new proposals to improve transparency in the way the FSA and the industry works.
Consumer group Which? has lambasted the authority for failing to commit to “name and shame” companies and says financial advertising and promotion should be scrutinised in the same way as general advertising, which is overseen by the Advertising Standards Authority.
The National Consumer Council welcomes its pledge to publish statistics about complaints to financial services but adds that the proposals do not go far enough.
The FSA says it wants to publish general statistics on the number of complaints companies receive, but refuses to “name and shame” companies that breach its rules. The authority has previously been criticised for not identifying companies that put out misleading ads or perform badly in mystery shopping exercises.
It adds that it operates under a strict legal framework, the Financial Services and Markets Act, which prohibits the disclosure of certain information. By contrast, it is asking stakeholders if it should be “naming and faming” companies that excel.
Which? principal policy adviser Dominic Lindley says: “For too long the FSA has been a passive bystander while companies continue to mislead and let people down. Naming and shaming is a powerful way to improve the industry.”