FSA Accused Of Assault On Consumer Rights

[EXC]

http://business.timesonline.co.uk/to...cle5372618.ece


From The Times

December 20, 2008


Independent panel accuses FSA of assault on the rights of consumers



Miles Costello


The Financial Services Authority (FSA) has been accused of an “assault” on consumer rights after it suggested that buyers of financial products should do more to protect themselves.

The Financial Services Consumer Panel, set up to ensure that the FSA works in consumers’ interests, said that it fiercely opposed a discussion paper published by the regulator yesterday that appeared to put more onus on consumers to safeguard their interests. Separately, the FSA wants to increase the number of senior posts in financial institutions that it can scrutinise under “approved persons” rules, including more traders.

As it issued its paper on consumers, the FSA said that it believed that markets would work more efficiently if consumers were encouraged to consider their interests more effectively. However, the panel said that the paper, Consumer Responsibility, was inappropriate when public confidence in financial services had plunged.

Adam Phillips, the panel’s acting chairman, said: “While we are not arguing with the need for consumers to answer questions honestly and read key information, the FSA document provides an opportunity for the industry to attack consumers’ rights, when it is the industry itself which needs to get its house in order and take responsibility for its actions.
“It’s also a time when many firms have been exposed as not giving consumers a fair deal, from the selling of personal protection insurance, to pension transfer advice and dealing with mortgage arrears.”




Mr Phillips said that the panel would “pursue this line vigorously”.
The FSA said that the document was meant to provoke debate. A spokesman said: “It is nonsense to suggest that this discussion paper is an ‘assault on consumer rights’.”
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Consumer Panel press release:

http://www.fs-cp.org.uk/press/ct_pr127.html


Our Work / Press ReleasesDateTitlePrintable version 19 Dec 08FSA assaults consumer rightsWhy is the Financial Services Authority (FSA) focusing on consumer responsibility at a time when large sections of the industry are not giving consumers a fair deal? According to the Financial Services Consumer Panel (FSCP), this is not the time for the FSA to be debating responsibilities for consumers. The Panel is questioning why the FSA is today publishing a Discussion Paper – FSA DP08/5 “Consumer Responsibility” – when consumers have little confidence in the financial services market and even less enthusiasm to engage with it.
Adam Phillips, the FSCP’s Acting Chairman said:
“Clearly, the industry has been putting pressure on the FSA to increase consumer obligations. While we are not arguing with the need for consumers to answer questions honestly and read key information, the FSA document provides an opportunity for the industry to attack consumers’ rights, when it is the industry itself which needs to get its house in order and take responsibility for its actions. Over the past few months we’ve seen consumer confidence fall to unprecedented low levels. It’s also a time when many firms have been exposed as not giving consumers a fair deal, from the selling of Personal Protection Insurance (PPI), to pension transfer advice and dealing with mortgage arrears. We have told the FSA that this is not the time to be discussing consumer responsibility, and we will continue to pursue this line vigorously with the FSA over the coming months.“

– ends–

[Amethyst]

Re: FSA Accused Of Assault On Consumer Rights

FSA -
FSA/PN/154/2008
19 December 2008
The Financial Services Authority (FSA) has today launched a discussion paper on consumer responsibility to explore what steps the regulator or others could take to help consumers understand and protect their own best interests more effectively.
The protection of consumers is one of the FSA's four statutory objectives, and the regulator adopts a two-pronged approach to achieving its consumer protection and consumer awareness objectives:

• it sets, monitors and enforces standards for firms; and
• provides – or require others to provide – education, information and advice for consumers.

While the FSA has no power to impose responsibilities on consumers, it is required by law to consider the general principle that consumers should take responsibility for their decisions when setting its consumer protection agenda. To this end, the discussion paper aims to provoke debate and bring greater clarity to the FSA's approach to consumer responsibility.
Dan Waters, FSA director of retail policy & conduct risk, said:
"Responsible and well managed firms that treat their customers fairly are crucial. Indeed, to this end, the FSA is strengthening its supervision of firms through the Supervision Enhancement Programme and its Enhanced Strategy for Small Firms. All firms have been warned that they face stronger and more intrusive regulation to ensure they are aware of their responsibilities to treat customers fairly.
"However, we also believe that markets will work more effectively if consumers are more involved, more capable and empowered. While we do not regulate consumers, we believe that we can work with firms, industry bodies and other stakeholders to encourage and enable consumers to consider their own interests more effectively in their decision making.
"We acknowledge that this is a debate that elicits strong feelings on both sides and we are keen to try to find common ground in order to contribute to better understanding and better outcomes for consumers in financial services markets."
The FSA believes that many of the positive outcomes of this work – such as greater engagement, better decision making by more capable consumers, a reduction in complaints and greater understanding around what happens when things do go wrong – may be realised only over the longer term.
However, in the shorter term the regulator hopes to reach a greater consensus among stakeholders as to the nature of consumer responsibilities and the sensible actions that consumers should take when engaging with the financial services industry.
Notes for editors

1. The discussion paper ‘Consumer responsibility’ is published today and can be found on the FSA’s website.
2. In his speech to the Financial Services Forum on 9 February 2006 - What does caveat emptor mean in the retail market for financial services - former FSA chairman Callum McCarthy summarised an attempt by the FSA Consumer and Practitioner Panels to agree, in the context of an advised sale of an investment product, on firm and consumer responsibilities.
3. The FSA made this commitment in its 2008/09 Business Plan: "As part of our work to embed more principles-based regulation and our work on the RDR, in 2008 we will carry out more work on the issue of consumer responsibility. We will re-engage stakeholders and publish a Discussion Paper in Q4 2008 setting out our thinking on the legal position, the actions consumers should take to protect their own best interests, and inviting views."
4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
5. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

[Amethyst]

Re: FSA Accused Of Assault On Consumer Rights

DISCUSSION PAPER - http://www.fsa.gov.uk/pubs/discussion/dp08_05.pdf

This reflects their perception that many unhappy transactions reflect at least an
element of mis-buying as well as mis-selling, but that regulatory blame only
attaches to firms’ shortcomings.


3.5 The common law starts from principles of ‘caveat emptor’ (buyer beware) and
freedom of contract. Consumer responsibilities under the common law are not
enforceable as such, but describe limits on the extent to which a consumer will be
able to recover any loss suffered as a result of a transaction.

[EXC]

Re: FSA Accused Of Assault On Consumer Rights

These reader's comment on the Times article really summed it up for me:

''The FSA must cease thinking and acting as a spokes person for the Financial Services Industry and rubber stamp almost everything the industry does. If any one is in any doubt, look at the Equitable Life debacle and the current catastrophe. Else they must cease be a financial burden on investors''

raj, harrow, uk


''The FSA, an absurdly captive regulator, stands in the way of the will of Parliament, and of justice, for its defence of its industry subscribers' sharp practices, in the face of the Unfair Terms in Consumer Contracts Regulations, and of the standard of fairness the latter establishes. Thumbs down.''

Jonathan, Hertford, UK

[Amethyst]

Re: FSA Accused Of Assault On Consumer Rights

We have irresponsible lending under study by the OFT and consumer responsibility being looked at by the FSA. Some middle ground does need to be found and I agree that Consumers need to be responsible for their borrowing, however it is extremely complex.


This is the part of the report that specifies the FSAs thoughts on Sensible Actions of Consumers to best protect their own interests.



Pre Sale
• Read and make efforts to understand advertisements and other
promotional material before acting upon it.
• Seek assistance/advice where appropriate.
• Check the authorised status of the adviser firm on the FSA website
• Help adviser understand needs where applicable and:
– answer questions factually and fully to the best of their
knowledge;
– volunteer information that seems relevant;
– help diagnosis of their appetite and capacity for risk;
– shops around for advice; and
– reads the Suitability Report.
• Read all documents with the keyfacts logo and other regulator
required material and:
– point out any errors in the information provided;
– ask questions if you don’t understand.
• Ensure understanding of the ongoing services available
from adviser and provider – including any limitations to
those services.
• Pay money on time.


PostSale
• Pay premiums.
• Review financial needs and circumstances on a regular basis.
• Monitor performance/read periodic statements and:
– consider altering asset mix;
– ask questions if you don’t understand;
– seek advice where appropriate.
• Tell firm of changes to circumstances or needs affecting the policy.
• Pay money on time.
• Protect personal information.

Problems
• Complain promptly when problems occur





QUESTIONS

Q1: Do respondents have any comments on this summary of
the basic legal position?

Q2: Do respondents believe that the current balance of
responsibilities, as defined by the common law and FSA
regulation, is appropriate?

Q3: Is there more that FSA can do to make clear how we
differentiate our expectations on firms dealing with
consumers with different levels of capability?

Q4: Do respondents have any comments on the suggestions
above, or further suggestions for actions that the FSA,
firms and others might take to help consumers to
better understand their role?

Q5: Do respondents have any comments or suggestions on
the list of sensible actions for consumers in Annex 1? (that I posted above)

[Amethyst]

Re: FSA Accused Of Assault On Consumer Rights

The Office of Fair Trading: Irresponsible lending consultation response published - The irresponsible lending responses recently

[righty]

Re: FSA Accused Of Assault On Consumer Rights

Caveat emptor was entirely valid in the days when it was applied to the likes of property such as horse trading, if it sounds like a horse, looks like a horse, & rides like a horse then chance is it is a horse

However in these days when many of the financial products hide their drawbacks (often purposefully) within complicated sounding legalese & the seller is constantly telling you how good their product is without telling you of the pitfalls then I think we need a vigorous regulator prepared to defend the rights of the consumer without attempting to impose evermore liability on the hapless buyer.

The FSA & the OFT have, particularly in recent months, shown that they are not up to the job & are really just another form of self regulation so loved of this government which allows them to pass the buck when things go drastically wrong
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Also there seems to be a belief amongst regulators & some firms that consumers lead non productive lives which allow them to devote copious amounts of time sorting out problems with lenders, utilities when they have families to feed, homes to run & for a lucky few jobs to go to.

They appear to become particularly miffed if your not prepared drop everything a deal with their questions because your leaving home to say collect the kids etc