FSA to toughen consumer protection over mis-selling of financial products
The head of the Financial Services Authority is to announce plans to toughen rules governing promotional materials and branch communications as one of a number of measures aimed at protecting consumers from being mis-sold financial products.
Hector Sants, chief executive of the FSA, is expected to call for its members to stop risky products being sold, rather than just pay out compensation when the damage has already been done, later today (12 March).
The move comes after investors compalined about having been hit by a number of mis-selling scandals in recent years.
Sants, who is stepping down from his position at the FSA in the summer says he is keen to push proposals through that give consumers better protection when buying mortgages, pensions and investment products.
This will be achieved by giving the regulator more power to vet risky products before they go on sale to the public.
The FSA says that by doing this, it is hoped that they can restore public trust in the financial services industry after an increase in the number of complaints surrounding mis-selling scandals including personal pensions, endowment policies, split capital investment trusts and payment protection insurance.
Earier this week, the FSA warned the public that bank accounts which charge fees for extra benefits such as insurance may be being mis-sold.
And yesterday, financial services industry watchdogs proposed the creation of a joint committee to improve customer experience and rebuild confidence in the beleaguered sector, aiming to “identify any risks with the potential to turn into widespread problems”.
The Conservatives want to scrap the FSA and hand some of its powers to the Bank of England if it wins the election.
