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FSA consults on temporary product intervention rules

by Michelle Abrego on Dec 03, 2012 at 11:45

FSA consults on temporary product intervention rules

The Financial Services Authority (FSA) has launched a consultation on the approach the Financial Conduct Authority (FCA) will take to exercise product intervention powers without consultation.

The Financial Services Bill, which is currently being discussed by the House of Lords, includes giving the FCA the power to make temporary rule changes without consultation.

The regulator said that rules made before a consultation would last no longer than 12 months and could not be renewed without a consultation.

The consultation outlines some instances where the FCA could intervene on a product.

  • Where a product is in serious danger of being sold to the wrong customers, for instance where complex or niche products are sold to the mass market
  • Where a non-essential feature of a product seems to be causing serious problems for consumers
  • Where a product is inherently flawed

The FSA said product intervention rules may address a wide range of issues.

It could, for instance, restrict the marketing of a product to only certain types of customer or require a product feature to be removed or changed, it said.

It said that it would have the power to ban a product but it would only do so in very serious circumstances.

Other possible interventions include issuing warnings, or using supervisory powers to require firms to amend professional materials.

Martin Wheatley (pictured), chief executive-designate of the FCA, said: ‘Making temporary product intervention rules is not something that we expect to do often but having this power means we can act quickly and decisively.

‘The use of the power will be a judgement based on the need to protect all market users, consumers and industry innovators alike, from the type of products which will cause harm and might generate compensation costs.’

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10 comments so far. Why not have your say?

Hickky

Dec 03, 2012 at 12:25

and just whoon is being consulted?

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Ian Lees

Dec 03, 2012 at 12:33

Interference Interference interference - for no good reason. I was particularlyinterested that Mr Wheately is going to decide - who can purchase each type of product ? Given such a scenario - the auto enrolment of pensions must be a prime contender. After all who would allow the sale of a product - which the total contibutions have not been set - and this is not just indexation. Secondly contibuting to a pension schem by the low paid means they can fail to obtain benefits. Finanlly the advice will beprovided by the Employer - who is unauthorised, or an insurance comapny who are not authorised. Currently I place all my auto enrolment requests to Scottish Widows whose - direct sales will deal with them as described bytheir senior management - at the faculty of Financial services at the ICAEW.

This route can save an enormous amount of time for advisers with such small payments - and so many difficulties explaining to the uneducated - that a pension is a good thing - for the right people with the right amount of income. Let Leo Pathetikos fool the people and - tell them " I'm in ? " Well he would be he is riuch enough to afford it - for many a pension needs to be tailored - to theri lifestyle - not just applied by force - and lack of thought.

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David Craik

Dec 03, 2012 at 12:54

This is a no-brainer. I assumed they would have those powers already. It beggars belief that they don't. Why are the FSA so useless?!

Answer - because they no-one with any decent experience of the industry they are regulating.

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Scotty McJock

Dec 03, 2012 at 13:36

Lets say there are two different "dodgy" products out there. In the case of the first one, the regulator spots it intervenes and it is suspended. In the case of the second they don't spot the issue, don't intervene and so some investors get hurt.

Has an interesting precedent not been set and what redress would the second lot of investors have against the regulator?

Just curious.

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Jonathan Kirby

Dec 03, 2012 at 14:19

@ Scotty McJock

You are absolutely right. In the eyes of the public, anything that is not banned is approved.

As IFA's should we not also be able to rely on their due diligence?

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Keith Cobby

Dec 03, 2012 at 15:42

Ian - this view about not contributing to pensions because it may affect benefits is wrong. Everyone should save if they have the means, future benefits are not guaranteed and I would rather rely on my savings than the Government of the day.

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Richard Hardy

Dec 04, 2012 at 09:51

Surely if the objective of the FSA/FCA is consumer protection, it would be easier for the product to be authorised before being allowed to market.

Bench testing as it's known as in the motor industry.

Once authorised by the Regulator then this will provide confidence to the adviser and consumer.

Or is that too simple?

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Richard Hardy

Dec 04, 2012 at 09:53

I forgot, you need someone with industry knowledge to authorise the products and both the FSA/FCA has proved in the past they are seriously lacking in anyone with this attribute (and common sense).

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Ian Lees

Dec 04, 2012 at 10:26

Hertzlich und Welcommen to the FCA - the Financial Condom Authority . . . . . . . . " Protection for all ". for consumers protection fro purchase - you are prohibited by the FCA to purchase a product or service - if you do not meet the FCA approval list . . . Phlebs and common people in one box - the rich and the wise in another box . . . and the Tax evasion companies in another box . . . becasue there is no Law against not paying your tax. Advice on this should be sought from Star bucks the trend coffee shop. Like Pension simplifications - it is obsfucation for all. Whilst the condom of financial advice is protection against taking risk or purchasing protective products - ot appears teh FCA is wearing therubbery hood of protection against advice . The CON DOM strategy condoned for life. Hertlich und Welkommen to " Restricted " advice whether by " rubber " or rubbery outcomes, of incoherent strategies. Let us hope that in this day and age we can have the return of a saviour - like Richard The Lionheart - from theri crusades - to save us from this terrorised society . May the Force be Wih You !

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Ian Lees

Dec 04, 2012 at 10:31

@ Keith Kirby - Yes I agree wveryone should save - but there are great volumes of people a on the breadline b need every penny to provide for theri families. The destruction of life assurance by the FCA - is treasonable in my opinion. Most reasonable people would like to save - but with inflation at 4% and peoples persopnal inflaion at 9% or 10 % many people are so over taxed overburned with complex costs ( e.g rail travel - and the ir exploitation for profit - regardless of " treating custoemrss fairly ". Many people will rely on benenfits - just as the immigrants do now e.g Me using large houses to contain a family to the cost of the tax payer i.e you and me ( if you are paying taxes ). This is an area which must be discussed. This is an area where a good adviser - if not restricted can advise to the clients best interest . i.e treating the custoemr with the care and attention they need - building trust helping people achieve THEIR goals and objectives. Real Protection Real Advice in a Real World.

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