FSA consumer responsibility project 'flawed'

Moves by the FSA to encourage consumers to take responsibility for the financial advice they receive and products they buy was today branded "flawed" and "unhelpful".

In its response to an FSA discussion paper, the Financial Services Consumer Panel (FSCP) says the regulator "should focus its attention on the firms it authorises, not the consumers it is set up to protect."

It adds the retail market is suffering not because of consumers' actions, but because of the behaviour of firms.

In December last year, the FSA 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.

"It is entirely reasonable that the FSA should be promoting sensible actions for consumers to take when seeking advice," FSCP acting chairman Adam Phillips says.

"However, the complexity of many financial products and the difficulty of finding an acceptable way to describe risk means that most consumers are ill-equipped to judge how a product will perform in future, and whether it meets their needs.

"By raising the flawed concept of consumer responsibility, and placing unrealistic expectations on consumers, the Panel fears that the FSA risks giving firms an excuse to evade responsibility for serving consumers well."

scott.sinclair@incisivemedia.com

HAVE YOUR SAY:

"This may be a first but today I am on the FSA's side. A culture has developed in the UK which encourages people to invest first and ask questions after on the grounds that they can always sue the adviser. Caveat emptor - which is basic common sense in every other walk of life - has gone totally out of the window in financial services. While advisers have a duty to explain risk and products clearly they do not have crystal balls. We always say to clients crossing the road is a low risk activity - unless you are one of the two pedestrians a day killed on our roads! The difference is pedestrians don't then come back and sue their shoemaker." Simon Webster, MD, Facts & Figures