The Financial Conduct Authority (FCA) does not want to pre-approve financial products, according to its incoming chief executive Martin Wheatley.
Appearing in front of the Banking Standards Committee, Wheatley (pictured) said he was concerned about giving simple products a kitemark for fear they would be mis-sold and at the other end of the market the regulator did not want to stifle innovation.
‘We don't see ourselves approving products,’ he said. ‘Not only is it near impossible but this would stop the industry innovating and creating.’
He said despite the FCA’s reluctance to regulate products prior to their launch there needed to be more done by the financial services industry to ensure products were suitable for consumers.
‘We are not supportive of a pre-approval process but there needs to be a change to communication from banks over products for the financial illiterate,’ he said.
Wheatley said the regulator would not be comfortable kitemarking simple products as it felt this could lead to intermediaries assuming they were suitable for all clients.
Wheatley said that kitemarking a product could be interpreted to mean that ‘this can be sold in all circumstances’.
'It would be very hard for me to stand back and say for simple products, don't worry,’ he said.
However, he said the regulator would not rule out a kitemark for simple products if it was made clear that these products would not be appropriate for all consumers.
Wheatley’s comments came in response to questions from Liberal Democrat MP John Thurso.