Consumer Panel: FSA will not budge on grandfathering

The Financial Services Consumer Panel (FSCP) will ensure the FSA does not "cave in" to pressure from the industry on grandfathering exemptions from qualification requirements for long-standing advisers, it has said.

As well as blocking off any FSA back track on the RDR's one-size-fits-all approach to the new standards, panel members' also repeated their calls for the industry minimum for advisers to be QCF Level 5, not 4 as planned.

Elsewhere in its annual report for 2010/11, the 15-strong Panel said it is putting the FSA under pressure to undertake further work on platforms, and end all forms of provider rebate.

"The Panel believes the FSA has to act, while the platforms market is still relatively immature, to bring the platforms market into line with other areas of retail distribution where the FSA has abolished commission payments," it said.

It is also urging the regulator to reconsider its model for a Professional Standards Board, which the FSCP believes should be independently chaired, rather than the in-house option chosen by the regulator.

Explaining its concerns, the FSCP said it has "long been concerned about the effectiveness of the FSA's approach to regulating retail firms' conduct of business".

On regulatory intervention in the development of financial products and services, the Panel said it would reserve individual product approval for irresponsible firms.

"Firms with a proven track record would be able to ‘self certify', provided that they had a clear audit trail showing they had identified, considered and sought to mitigate key causes of potential consumer detriment," it said.

The Panel promotes consumer interests in financial services and engages with the FSA as it develops policy, usually well before consultations are published more widely.

FSA board members agree a budget for Panel members' fees, expenses and any work it commissions, and the Panel is also supported by a secretariat of FSA staff.

Actual expenditure for the Panel in 2010/2011 was £865,000, an overspend on its budget of £184,000.

The increase was due to the government's restructuring of the regulatory framework, and the new policy initiatives being developed by the FSA and EU as a result of the crisis, it said.

The Panel also upped its staff from 12 to 15.