FSA outlines plans to curb mis-selling

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The Independent Online

The Financial Services Authority (FSA) could ban some products, warn investors away from others, and set price caps in a radical overhaul of its policies as part of a global crackdown on mis-selling toconsumers.

In a discussion document published yesterday, the City watchdog suggested intervening in areas such as pre-approving some products, mandating product features, preventing non-advised sales, issuing consumer and industry warnings, and setting advisers further competence requirements. The FSA's chairman, Lord Turner, has repeatedly said he wants to break the cycle in Britain of a mis-selling scandal in financial products every few years as regulators across the world play catch-up in consumer protection.

The US has already put in place a new consumer watchdog, while the European Union is also looking to beef up safeguards. So far, however, regulators have stopped short of introducing direct product regulation for fear, in part, of stunting innovation.

The FSA's chief executive, Hector Sants, has also given warning that the new Consumer Protection and Markets Authority, which will incorporate key elements of the FSA from 2012, will need more rules-based powers of intervention and disclosure, such as banning products, if it is to fulfil its goal of being a consumer champion.

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