Consumer groups given power to force product probes

Consumer groups will have the power to insist regulators investigate complaints of mass mis-selling of financial products when the Financial Conduct Authority takes over in 2013, Mark Hoban, financial secretary, will announce today.

The FCA, which will assume the Financial Services Authority's consumer protection role, would be obliged to look into the 'super complaint' and respond within a set period.

According to the Financial Times, Hoban will tell the Which? consumer group conference later: "We've proposed a range of new powers for the regulator so that they can give better protection to consumers, including the power to ban toxic products.

"But we want to go further by giving front-line consumer groups like Which? the power to hold the regulator to account where there has been widespread mis-selling of financial services products."

Consumer groups can already raise mass complaints about competition issues with the Office of Fair Trading.

The new power is part of a wider package of reforms to improve investor protection and supervision of banks and insurers, unveiled by Hoban in a draft bill earlier this month. 

Peter Vicary-Smith, the Which? chief executive, said the power for consumer groups to raise particular issues directly with the regulator and to insist on prompt consideration of them will mean problems with products can be tackled earlier.

"People will finally get the speedy and fair redress they deserve," he told the FT.

"In the past 10 years consumers have suffered from mis-selling and toxic products on a grand scale....Excessively long timescales, poor complaints handling and inadequate redress have become all too common."

The focus on widespread mis-selling comes after a series of scandals involving payment protection insurance, Keydata products, and poor complaints handling.