David Prosser: Bringing the salesmen to book at last

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The Independent Online

Outlook It is all change for Martin Wheatley. Hired earlier this month to head up the new Consumer Protection and Markets Authority, Mr Wheatley, currently a regulator in Hong Kong, hasn't even started yet and already his job title has been changed. The CPMA, as it turns out, will be known as the Financial Conduct Authority – the idea being that its raison d'être will be to police the activities of those who sell financial services to consumers in one way or another.

In theory, one of the FCA's more potent weapons will be a power to ban products it judges might be damaging to consumers, or to curb their distribution for a period of up to 12 months. One can certainly see the attraction of such a sanction. Think of all those mis-selling scandals – personal pensions, endowment mortgages, precipice bonds, split-capital investment trusts, to name but the most egregious – that might have been averted had the products in question simply been outlawed.

The difficulty is, however, that it is not a dangerous product that lies at the root of most mis-selling but a salesman determined to sell it irrespective of whether it is appropriate for the buyer. For many people, there was nothing wrong with personal pensions, for example, but they were a poor investment for savers who were persuaded to switch out of more attractive occupational pension plans. Mortgage endowments weren't bad in themselves, but lenders failed to warn people there was a risk their loans might not be repaid in full.

The challenge for Mr Wheatley's consumer body, then, will not be so much to identify dangerous products – the Financial Services Authority ought already to be picking up on those – but to police the activities of those selling them. Even the most innocuous savings account might be inappropriate for certain customers.